BoI Governor: New gov't must address deficit

Amir Yaron  photo: Rafi Kutz

"The next government will face a significant challenge in the budget deficit and low productivity in the Israeli economy," says Prof. Amir Yaron.

"The cooperation between the Ministry of Finance and the Bank of Israel is taking place constantly at all levels in a wide range of spheres. The Israeli economy is growing at a healthy pace, and up until now, the markets have not very greatly affected by the uncertainty generated by the political situation. It should not be concluded, however, that no damage has resulted," Governor of the Bank of Israel Prof. Amir Yaron said today during a meeting with Minister of Finance Moshe Kahlon and leading Ministry of Finance officeholders in Jerusalem.

"The next government will face a significant challenge in handling the budget deficit, and important tasks in addressing the problem of low productivity in the Israeli economy," Yaron added. "All elected officials need to realize that postponing treatment of these issues will harm Israel's economy."

Yaron was commenting on political instability during his meeting with the Ministry of Finance's top officials. The Moody's rating agency warned late last week that Israel's rating was at risk. "The ambiguous results of the elections in Israel jeopardize the necessary budget discipline," Moody's wrote pessimistically in the heading of its recommendation to investors.

Following the meeting between Kahlon and Yaron, the Ministry of Finance delegation visited the currency division's facilities and the marketing division's transaction room. An economic discussion was then held with participation from Bank of Israel director general Hezi Kalo, Research Department director Prof. Michel Strawczynski, Supervisor of Banks Dr. Hedva Ber, Market Operations Department director Andrew Abir, and Supervisor of Credit Data Sharing Tzuriel Tamam.

"The coming period will be challenging, and will require full cooperation between the Ministry of Finance, the Bank of Israel, and all of the leading entities in the Israeli economy in order to navigate the period of economic instability," Kahlon said. "The governor and I spoke about the political instability requiring us to behave with great responsibility in order to avoid damaging the Israeli economy. The macroeconomic data presented to us were good, certainly in comparison with the global data.

"The review of the banking reform shows strong progress. We were successful in separating the credit card companies from the banks, and we have to continue this in order to open the banking market to true competition. In order to maintain our sound economic state and meet the economic challenges ahead of us, we must quickly complete the formation of a new government for the benefit of management of the Israeli economy."

Published by Globes, Israel business news - en.globes.co.il - on September 23, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Amir Yaron  photo: Rafi Kutz
Amir Yaron photo: Rafi Kutz
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