Israeli Finance Minister Urges Budgetary Restraint
Israeli Finance Minister Ronnie Bar-On told the Cabinet today that the government will have to avoid new spending commitments this year and next, and may “adjust'' previous obligations to contend with a slower economy.
Israel faces “more moderate growth'' this year because of the global economic slowdown and the shekel's appreciation against the dollar, Bar-On told ministers in remarks summarized in an e-mailed statement from the Jerusalem-based Finance Ministry.
Israel has been able to meet or exceed its budget deficit and spending growth targets in each of the last four years as a growing economy boosted tax revenue. The International Monetary Fund last week lowered its estimate for 2008 Israeli growth to 3 percent, which would be the slowest pace since 2003.
“We will keep to responsible economic policies, which will require us to adjust the commitments we agreed to make in the framework of permissible spending in 2008 and 2009, and to avoid agreeing to additional budgetary allocations,'' Bar-On was quoted as saying in the statement.
The government remains committed, even as the economy slows, to its goal of reducing debt as a percentage of gross domestic product, lowering taxes and keeping to the spending- growth target, Bar-On said today.
Israel's budget surplus for the first three months of this year narrowed to 5.6 billion shekels ($1.56 billion) from 6.4 billion shekels a year earlier, the Finance Ministry said on April 2 bad credit payday advance free credit report and score.
Shekels' Gain
Bar-On said Israeli financial markets had been “relatively'' unaffected by the global liquidity shortage created by the subprime crisis. Instead, the strength of the shekel, which reached an 11-year high against the dollar on March 13, and the slowing global economy will probably cool economic growth this year, Bar-On said.
Bank of Israel Governor Stanley Fischer told the Cabinet that the shekel will probably continue appreciating against the dollar over the “medium and long term'', TheMarker.com online news service reported, without saying where it got the information.
The yield on the government's Shahar bond due in 2016 fell to 5.54 percent today, its lowest in about three weeks.
Fischer backed Bar-On on the budget restraint and tax break for business while opposing further tax cuts, TheMarker said. A spokeswoman for the central bank said she couldn't immediately confirm the remarks.
Israel should be able to weather the global slump because the economy is “balanced'' as it relies on both exports and consumer spending for growth and has a current account surplus, he said.
Bar-On urged ministers to ensure that two of his initiatives, to aid exporters through a government fund and to implement an accelerated-depreciation program, weren't delayed by red tape.