Bank of Israel governor warns election would be terrible news for economy
Yaron noted that the political uncertainty could trigger a downturn in the market as the economy already faces "considerable difficulties" amid the coronavirus pandemic.
By ZACHARY KEYSERAmir Yaron attends a ceremony whereby he is sworn in as Bank of Israel governor by Israel's President Reuven Rivlin, in the presence of Prime Minister Benjamin Netanyahu and Finance Minister Moshe Kahlon, in Jerusalem December 24, 2018.(photo credit: AMIR COHEN/REUTERS)
Bank of Israel Governor Amir Yaron warned that a fourth election in 19 months could severely damage the Israeli economy amid the coronavirus pandemic, especially if the government does not decide to pass a biennial budget soon, according to Ynet News."The government must move as fast as possible in setting a clear outline for the state budget and other economic decisions required at this time," he said in a special statement issued by the Finance Ministry.Yaron's comments come amid severe tensions within the coalition due to the crisis between Prime Minister Benjamin Netanyahu and Alternate Prime Minister Benny Gantz over the state budget.He noted that the political uncertainty could trigger a downturn in the market as the economy already faces "considerable difficulties" amid the coronavirus pandemic."Against the backdrop of these difficulties, there is great importance in stabilizing the government's conduct and having an orderly decision-making process, which will reduce the uncertainty faced by households, businesses and entities dealing directly with the [coronavirus] crisis."Around 150 Israeli entrepreneurs and CEOs joined the governor's call, demanding a quick decision on the budget. But Yaron only requested that a budget be passed quickly without alluding to how long it should extend (one or two years) – just that a swift decision is needed to save the economy, to strengthen market confidence and bolster the ability of government officials to respond to the crisis effectively.A senior official at the Finance Ministry told Ynet that "there is no longer any significance in preparing an annual budget, which will not be approved before the beginning of November. It is possible, however, to prepare a biennial budget within the remaining time, until August 25, and it is a pity as every day passes" without doing so.Netanyahu is currently in a political dispute with Gantz over the prime minister’s insistence that the government pass a one-year budget now – which effectively would be only for November-December, given the legislative timeframe – and not a combined budget for both 2020 and 2021, as agreed to in Likud's coalition agreement with Blue and White.DURING THE heightened tensions, the weekly cabinet meeting scheduled for Sunday, August 9, was canceled since no agenda had been posted by press time, a situation indicative of the severe strains between the two leaders.The coalition agreement between Likud and Blue and White stipulates that both parties must agree to the cabinet agenda, which is likely why no agenda had been agreed upon.The Likud Party stated on Saturday night that the cabinet meeting would not be held due to "the refusal by Blue and White to put on the agenda the government economic assistance program of the prime minister and finance minister to deal with the NIS 8.5 billion corona crisis, which includes assistance to at-risk populations.""The Likud demands that Blue and White not halt the transfer of funds to Israeli citizens at this time of dealing with the coronavirus crisis," added the party.Blue and White stated in response that the cabinet meeting was not being held because of "the insistence of the Likud to not uphold the coalition agreement and to not approve the government regulations that ensure its stability.""This is not the first time that the Likud has not held to its commitments – and every other excuse is a complete lie to the Israeli public," added Blue and White, stating that the finance minister's plan is "a multi-billion-dollar long-term plan that has not yet been fully presented and has not yet been finalized."Many believe that Netanyahu is pushing for delaying the state budget to delay Gantz from backing legislation that would stop Netanyahu from serving as prime minister. As the divisions between the Likud and Blue and White have increased in recent weeks, and the allegations that Netanyahu is seeking new elections intensify, so too have calls from Gantz’s former allies, now in the opposition, to pass legislation which would prevent MKs from forming a government if they are under indictment.Such legislation was proposed by opposition parties after the March election and before the formation of the government, as a way of preventing Netanyahu from retaining his premiership, but Gantz ultimately chose to form a unity government instead.Asked about his position on passing such a law now, with Netanyahu insistent on passing just a one-year budget despite the prime minister's coalition agreement with him stipulating a two-year budget, Gantz declined to rule it out.Jeremy Sharon contributed to this report.
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