finance conference steinitz 248.88.
(photo credit: Finance Ministry)
Israel's debt-to-GDP ratio has risen 0.9 percent to 78.9% since the end of 2008, while in some other countries debt ratios have grown 10%, Finance Minister Yuval Steinitz said Tuesday.
"The question in this [economic] crisis is not how fast we can get out of it but at what price," he said at the Calcalist Pension Conference in Tel Aviv. "Israel is paying a relative low price compared with the heavy prices paid by Western countries suffering under ballooning deficits."
"I have just come back from a meeting with the International Monetary Fund delegation," Steinitz said. "[They] stressed that this year they have not only come to teach us but also to learn from us, to learn how Israel has successfully coped with the crisis - not only what we did but what we did differently than other countries."
The Organization of Economic Cooperation and Development expects Israel's debt-to-GDP ratio to grow to 82% in 2010 and to ease moderately in 2011.
The country's resilience in the face of the global economic crisis has been helped by the passage of a two-year budget and the economic deal struck with the Histadrut Labor Federation and employer organizations, Steinitz said.
"At the height of the global economic crisis, Israel was the only country in the world that managed to approve a two-year budget," he said.
The IMF delegation met with Steinitz and Bank of Israel Governor Stanley Fischer on Tuesday. The delegation of four economists is headed by Peter Doyle, chief of the IMF's European Department.
The IMF delegation is here until December 14 to meet with senior officials from the Finance Ministry, the Bank of Israel and other institutions. At the end of the visit the delegation will report on the local economy to Steinitz and Fischer. It will then return to Washington to prepare its annual report on the Israeli economy.
"We are still on the path of economic recovery and have not yet returned to the strong growth levels seen before the crisis," Steinitz said. "We can still expect aftershocks from the global crisis in Israel and around the world, such as the debt crisis in Dubai."
Improving the pension system was very important, he said, adding: "Although Israel has come out of this crisis in better condition than other countries, it has made us think anew about how to to best protect the public's savings. What is important is that we don't go backward to the system of budgetary pensions, but rather forward to a system where the government does not manage pensions - it supervises them."
Steinitz said more transparency, information and better advice were needed for savers to make decisions and protect their long-term savings. "Most citizens today don't know or understand what they have," he said.
Also speaking at the conference, Histadrut chairman Ofer Eini warned that the industrial quiet the economy enjoyed over the past year would come to an end unless the Treasury negotiates reforms with the Histadrut and the private sector.
"The industrial quiet will end on January 1, 2010," he said. "I will do everything to keep strike actions as low as possible. I am calling upon the finance minister... to ask Treasury officials to discuss reforms at the economic roundtable created with the Histadrut and employer organizations. There will only be a reform of the pension system if it is discussed with us. The Bachar reform has already gone too far, causing great damage to the saving public and the investment community."