Treasury, PMO fail to reach saftey net deal

Olmert says delaying package may spell its failure; Fischer: PM's plan broader, but still cost-effective.

Stanley Fischer upclose 88 248 (photo credit: Ariel Jerozolimski [file])
Stanley Fischer upclose 88 248
(photo credit: Ariel Jerozolimski [file])
The Finance Ministry and the Prime Minister's Office failed to reach an agreement on a safety net pension plan amid the global financial crisis. Representatives of the Treasury and the PMO held a late night meeting on Monday but decided that the issue was too important to be decided under pressure of time. The two sides will continue their discussions until a deal is reached, sources said. Earlier on Monday, Prime Minister Olmert expressed confidence that an agreement over the extent of the safety net plan would be reached by the end of the day. Coming out of a meeting with BOI Governor Stanley Fischer, Olmert warned that further delay could jeopardize the plan. "Agreement on the pension safety net can be reached today," Olmert said, predicting that the plan would be brought before the cabinet for approval in the coming days. "The plan should be introduced soon, and every delay can cause the plan to fail." The PMO announced that "the prime minster has full confidence in the professional judgment of the Bank of Israel governor and the finance minister, and has instructed his office to maintain the professional cooperation with officials in the Treasury and the Bank of Israel, whilst refraining from unnecessary disputes, which can be bridged with good will and flexible thinking." Before meeting with Olmert, Fischer voiced his support for a safety net plan but failed to state outright whether he sided with either the Finance Ministry or the PMO in the heated dispute over its scope. He did, however, note that Olmert's plan provided added support while still remaining cost-effective. "The Bank of Israel supports a pension safety net plan," Fisher said, in what was his first comment on the debate. "The Treasury's economic stimulus package is a good one, since it provides solutions to relevant people whose savings have taken a blow from the economic crisis, and its cost is also relatively low." However, the governor noted, the PMO's plan deals with a "larger group of people, while its cost is very similar to the one proposed by the Treasury." Fischer went on to say that the "plan must be focused on those who will retire in the coming years, who do not have alternative sources of income and could be affected by the financial situation. The biggest danger in safety net plans is that everyone wants to be as generous as possible and expand the plan to include more and more people, but then its cost jumps - so we and future generations will have to pay a heavy price [to fund it]." Meanwhile, Finance Minister Ronnie Bar-On stressed the importance of approving the Treasury's stimulus package rather than the one proposed by Olmert. According to Bar-On, who spoke with Israel Radio, "We must not mortgage our future at the expense of the present, and put the economy in an impossible place." [Olmert] wants to give to those who have a pension of 20 or 30 thousand shekels - is that social justice? Ultimately, this money will come from the taxpayers' pocket. I can have it easy, I can just write the check and in three or four years someone will have to face a mountain and say 'who let this happen?'" he said.