Yossi Bachar, the outgoing director-general of the Ministry of Finance said Monday he was confident about Israel's economic potential and the country's ability to continue to attract a flow of foreign investment in 2007.
"The country's economy is in a good state. Even after the Lebanon war, we are in a surplus," he said at the investors' conference organized by The Marker and Migdal Capital Markets. "We had estimated a deficit of 2 percent of GDP before the war and we are now looking at a deficit of between 1.5% to 2% if not lower."
Bachar added that Israel's economy could go a long way if the "right things" were done, and listed the principles underlying Israel's economic growth in recent years - budget discipline, cutting government spending and economic reforms.
Looking ahead, Bachar emphasized the importance of a government push for further reforms in areas such as education and electricity in an effort to turn the country into a more competitive and attractive economy to foreign investors.
"The State of Israel is not good at management. The faster we exit from the ownership or management of business corporations the better for us all," he said.
Bachar reported that foreign investors during his trips abroad have indicated they would continue to invest in Israel. "What worries investors abroad most is the stability and trustworthiness of governmental institutions in Israel," he said.
Also speaking at the conference, Dan Margalit, co-manager of the BDO Ziv Haft accounting and consulting firm, predicted that foreign investment in Israel would be in the range of $7 billion to $10b. in the first half of 2007, through the acquisition of publicly and privately-held Israeli companies.
Margalit explained that the large amount of money available for investment abroad and the good alternatives available in Israel such as attractive interest rates and a high credit rating would lure companies to raise money here.
Regarding trends for 2007, Margalit pointed out that Israeli companies were increasingly looking at alternative markets such as Canada and Hong Kong, where regulation was more convenient, while accounting standards remained international ones.