Stanley Fischer at press conference in Jerusalem_311.
(photo credit: Reuters)
Despite warnings of an economic slowdown, the Bank of Israel’s budget will grow
by 14 percent next year, mainly because of a temporary spike in employee
retirements under a new workplace agreement.
The Knesset Finance
Committee voted to express full support for the central bank’s 2012 budget,
which was released Monday. The budget will increase to NIS 798.2 million next
year, NIS 94.5m. more than in 2011.
Bank of Israel Governor Stanley
Fischer told the committee the extra funding would help the bank meet workplace
agreements and fund external steps such as the appointment of a new economic
adviser to the government.
An extra NIS 49m. will go toward the
retirement packages, although the higher number of retirees paves the way for a
new generation of young professionals who will start on a lower wage, the bank
said in its 2011 budget report. An extra NIS 20.6m. will be allocated for
investments to support projects in the fields of logistics and
Finance Committee chairman Moshe Gafni (United Torah Judaism)
said the Bank of Israel was one of the best central banks in the world. It was
no mistake that Fischer was considered a front-runner for the position of
International Monetary Fund managing director earlier this year, he
Fischer, 67, was ruled ineligible because of his age.
personally would have looked past these technical limitations and appointed him
to the [IMF] position, but as an Israeli I am happy that he stayed here,” Gafni
said. “The Bank of Israel is a unique body, and we want to strengthen its
Committee members Uri Ariel (National Union) and Zevulun Orlev
(Habayit Hayehudi) both called on the bank to reconsider its budget, especially
since other government offices and public bodies are reducing
“The bank is constantly preaching about not breaking the
budgetary framework, but in practice the bank itself is increasing its own
budget substantially,” Orlev said. Turning to bank officials present at the
committee hearing, he added: “Imagine that the government took your lead [and
raised its own budget]. It would probably receive a barrage of criticism, and
you should take that into consideration.”
Meanwhile, IBI investment
released its 2012 preview on Monday and said it expects the central bank to
pursue more aggressive monetary policy next year in an attempt to protect the
country from the effects of the growing crisis in Europe.
shown a tendency to react aggressively when he smells oncoming recession, IBI
chief economist Rafi Gozlan told reporters in Tel Aviv. He predicted that the
real interest rate could fall into negative territory if the crisis in Europe is
worse than anticipated.