Stanley Fischer 311 R.
(photo credit: REUTERS/Baz Ratner)
If the state decides to expand defense expenditures, it must increase taxes
rather than expanding the budget deficit, Bank of Israel Governor Stanley
Fischer told the Knesset Finance Committee on Wednesday.
economy was still in good shape despite the worsening euro-zone debt crisis, he
said, but he urged responsible budgetary policy to deal with it.
more freedom to act than the European nations and the US because of the correct
steps the government took in the past,” Fischer said. “If we behave correctly,
we can successfully deal with the risks before us.”
remained positive, he said, pointing to the 5.9 percent unemployment rate,
growth in building starts and increased foreign investment. But he
acknowledged some negative signs, mainly the drop in exports and taxation and
revenues and revised growth forecasts.
Fischer said the Bank of Israel
would revise its 2012 growth forecast of 3.2% to something closer to the OECD’s
estimate of 2.9%. British investment bank Barclays Capital forecast in
its quarterly forecast of emerging markets Wednesday that the Israeli economy
would grow at just 2.5% next year.
Committee members criticized Fischer
for using the word “populism” to describe increased expenditure to meet security
and social needs.
“The use of the phrase populism is out of place,” MK
Miri Regev (Likud). “The role of the bank is to examine what is happening
in the world but not to express an opinion on what is populist and what is
not. It is not always bad to be populist. We want our economic success to
be enjoyed by the entire population.”
MK Amir Peretz (Labor) said other
Bank of Israel governors were more socially aware than Fischer and had argued in
favor of policies such as raising the minimum wage. Not everything the bank
espouses should be regarded as the truth, he said, and not everything it opposed
should be regarded as populism.
MK Majallie Whbee (Kadima) said he feared
the government would take advantage of what Fischer said and ignore social
MK Zevulun Orlev (Habayit Hayehudi) asked why the bank sees the
economy only through interest rate and budget-deficit figures while ignoring the
cost of living and the poverty rate.
MK David Azoulay (Shas) said if
discussing the cost of living and the inability of young couples to obtain
housing is populism, then he would be proud to call himself a
Meanwhile, the Treasury briefed reporters Wednesday on the
defense budget, saying it is given only a partial picture of the Defense
Ministry’s expenditure. According to the Treasury, Tzachi Malach, the
accountant assigned to the Defense Ministry, signs all of the ministry’s
outgoing expenses but cannot keep track of budget deviations.
Treasury said communications expenses constitute a significant portion of the
defense budget, and it has no way to keep track of how much the Defense Ministry
spends in this area. It said the ministry can delay communications payments to
later years, making it impossible to cut the defense budget effectively in 2012.
Likewise, it said it has no idea how much the IDF spends on wages and accused
Defense Ministry officials of covering up Treasury attempts to access this