Is it true that it was proposed to outgoing Governor of the Bank of Israel
Stanley Fischer that he become Israel’s next finance minister? Fischer, who on
Wednesday gave his last Jerusalem Press Club briefing in his present capacity,
at Mishkenot Sha’ananim, conceded that there were rumors to that
Pressed as to whether there was truth in the rumors, Fischer
replied: “I don’t like to talk about ‘four-eyed conversations,’” translating a
Hebrew idiom that means “private conservations” into English in a particularly
Asked whether he was going to take a position similar to
his current one elsewhere, Fischer, 69, responded that he had been told when he
was 25 never to accept an offer that he’d never been given.
the period of his tenure following a question to whether anything had surprised
him after taking up his post in 2005, Fischer acknowledged that he had been
surprised by the robustness of the Israel economy in its remarkable powers of
recovery and shock absorption in the face of wars and other earthshattering
events. He paid tribute to the hi-tech sector as an important factor in Israel’s
ability to evade economic turbulence.
When Fischer was introduced by JPC
Director Uri Dromi, the latter stated that Fischer was retiring, Fischer’s
instant retort was that he was not retiring, he was stepping down, which led to
instant speculation that he was moving on to something else, though he mumbled
under his breath that it wouldn’t be at the World Bank, where he was vice
president for development economics and then chief economist from 1988 to
Turning the subject away from himself and toward the economy,
Fischer noted the difficulties that the incoming government will have to face
when presenting the 2013 state budget.
This is a small economy, he said,
although every now and again Israel has delusions of grandeur. Israel’s GDP, he
noted, is only 1.5 percent of that of the United States.
economy that has been growing slowly since 2009, he said, will return to a more
rapid growth in 2014, though forecasts still have some unclear
Israel’s annual growth rate till 2011 was 5%, after which it fell
to 3%, and the forecast for 2013 is 3.8%, though this still needs to be
clarified, said Fischer. The anticipated gas from the offshore Tamar field
should have a 1% positive impact on GDP, he said.
reports to the contrary, Fischer said that there was more or less full
employment. The share of the population looking for work is rising rapidly, he
said, but admitted that he did not know if the main factor in this rise could be
attributed to the haredi and Arab sectors.
There has been a slight
decrease in unemployment figures in the last quarter of 2012, he said, but was
unable to determine whether this was a sign of real change or just
Israel does not have a problem with its balance of payments, and
inflation, which is currently around 1.3%, is expected to rise to 2% in the
coming year, Fischer said.
The exchange rate has been appreciating as
other countries make their fiscal policies more expansionary.
investors have found it more profitable to invest their money in Israeli banks
than in those in their home countries.
While real estate prices in the
center of the country are rising, the opposite is true in the periphery, where
according to Fischer, one can buy an apartment for less than it cost a year ago.
He was almost amused by this because Israel’s peripheries “are among the closest
of any country in the world,” and in many cases are as close as 20 kilometers
from the Center.
Fischer was proud that Israel has a strong banking
system and a tough supervision of the banking system.
Moving back to the
budget, he said that the deficit for 2012 was targeted at 2% in 2010, but it was
clear in 2012 that this wasn’t going to happen and that an adjustment would have
to be made. The target was then raised to 3% but ultimately became
Most of the divergence, Fischer explained, was due to tax revenues
being lower than expected.
Again correcting media reports, he said that
the government is not cutting back on expenditure, but on what people expected
it to spend.
In fact state expenditure will go up by 5% this year,
although the anticipated increase was 10%.
The shortfall in state
revenue, he added, will be around NIS 6 billion.
Although it was easy to
criticize the government, Fischer declared, in his view, given that it was an
election period, the government had taken a very courageous step toward reducing
its budget problem by raising value-added tax and passing legislation for
These measures will make the current problem more
manageable, he said.
In reference to talks about cuts in the defense
budget, the heavyweight of the infrastructure budget, and cuts in child
allotments which will have a serious impact on large families, Fischer pointed
out that none of these policies, which are being worked on by both the Treasury
and the Prime Minister’s Office, is by any means finalized. The composition of
the new government will affect what is politically possible with regard to
budgetary problems, he said.
Fischer was hopeful that more haredim will
realize the need for secular education to prepare them for the workforce. There
are signs in this direction he said, citing a figure of 6,000 haredim enrolled
in colleges. Over the past decade, he said, the ultra-Orthodox sector had grown
from 4% of the population to 10% and the Arab sector from 16% to 20%, while the
non-haredi Jewish sector had declined from 80% to 70%.
heartened by the number of Arab-run businesses and partnerships with Jewish
entrepreneurs that were now flourishing in the Galilee.
curious as to when Fischer had made his decision to step down.
quite candid about it. When he had initially wanted to step down and had been
persuaded to stay, he had told himself that he would do so until he knew that
the new Bank of Israel Law that took effect on June 1, 2010, was
Once he was satisfied that it was working, he proceeded with his
decision to step down.