Bank of Israel Governor Calls on Government to Settle Budget Issue Now

Bank of Israel Governor Amir Yaron (Flash90)

As the government coalition appears to be nearing disintegration over a dispute over the state budget, Bank of Israel Governor Amir Yaron issued a warning that failure to resolve the issue will seriously undermine efforts to stabilize the economy.

“The changing morbidity trends and developments are causing great uncertainty regarding employment, businesses’ income and government intake and expenses,” Globes quoted him as saying.

The order of the day should be “stability in the conduct of the government and an orderly decision-making process,” something which has eluded Israel’s leaders up until now.

“The government must move forward as quickly as possible in determining a clear outline for the state budget and other economic decisions needed at this time,” the central bank chief added. “Reducing the political uncertainty will contribute to the confidence of the markets in the Israeli economy and improve the ability to deal with the crisis. Further elections would be negative news for the Israeli economy at this time.”

If a new budget is not passed by August 25, the law mandates new elections.

Local media have been carrying daily reports on Prime Minister Binyamin Netanyahu‏‏’s intention to go to elections, which he denies. However, at the same time he has been insisting that the next budget be a single-year budget, to provide flexibility in the emergency, whereas Defense Minister Benny Gantz says it must be a two-year budget, as stipulated in the coalition agreement.

As of Sunday, neither side had given in, and friction between them seemed to be mounting.