Israel government approves new deficit plan (AFP) AGENCE FRANCE PRESSE) 07/01/12)
AFP} Agence France Presse
AFP} Agence France Presse Articles-Index-Top
The Israeli government on Sunday voted to go ahead with plans to
raise the 2013 budget deficit target to three percent of GDP, despite
objections from the governor of the central bank.
The weekly cabinet meeting agreed to seek to fast-track the plan
through parliament with a view to passing it into law as early as
possible, the government said in a statement.
It added that a ceiling of 2.75 percent would be set for 2014,
falling to 1.5 percent in 2019.
Speaking to reporters before the meeting, Prime Minister Benjamin
Netanyahu said the rise would still leave Israel within a tighter
deficit band than most European countries.
"This is the target, the European standard of three percent ... It
seems to me that in Europe, Germany is perhaps the only country that
is below this," the premier said.
"I think that this is the right dosage," he added.
On Thursday, Bank of Israel governor Stanley Fischer warned that the
move could force interest rates up. "It´s not good. It´s not
reasonable," he told an economic conference at a Dead Sea hotel.
"Such policy will cause only inflation and economic instability," he
"I do not believe that the monetary committee will be able to
maintain its policy of interest at the present level if fiscal policy
does not follow a sustainable path."
Arriving for Sunday´s cabinet meeting, vice prime minister Silvan
Shalom, a former finance minister, told reporters that the government
and Fischer had different priorities.
"He is committed first and foremost to price stability, only after
that to employment and growth," he said.
"We as a government have to look at the broader picture. We have to
know that unemployment is already on the rise ... so we are obliged
to look both at growth and employment alongside price stability and
not just look at inflation." (Copyright © 2012 Agence France Presse.
Return to Top
MATERIAL REPRODUCED FOR EDUCATIONAL PURPOSES ONLY