Nessuah Zannex Securities chief economist Shlomo Maoz told “Globes” today that authority should be divided between the government and the Bank of Israel.
”Governor of the Bank of Israel David Klein and Minister of Finance Benjamin Netanyahu think alike. They may or may not agree, but they will understand one another. There will be fewer misunderstandings, and fewer declarations by Klein. Even if they disagree, their dispute will center on the issues, not emotions. The public will realize that matters are being conducted on their merits,” Maoz said.
Maoz added, “The Minister of Finance does not have enough monetary experts. The relations between the Ministry of Finance and the Bank of Israel in recent years have damaged Israel’s economy. Klein expressed himself too sharply and too often, and the economy was the loser.”
Maoz explained that the world realized 20 years ago that a separation between the central bank and the government was necessary. The government should set inflation and growth targets, while the central bank should concern itself with price stability.
Maoz reiterated that Netanyahu should cut the state budget by NIS 6-7 billion, not NIS 15 billion. “Netanyahu should issue dollar bonds until we get the aid from the US, in order to prevent a sharp depreciation in wartime. The moment he issues Gilboa bonds, inflation will vanish, the interest rate will fall, and the economy will recover. Government tax revenues will rise, and the budget deficit will fall. This is top priority today. If Netanyahu doesn’t issue Gilboa bonds, he’ll lose his window of opportunity.”
Published by Globes [online] - www.globes.co.il - on March 4, 2003