Top Ministry of Finance officials who read a "Globes" report on Thursday about Governor of the Bank of Israel Prof. Stanley Fischer's conditions for accepting a second term, were apparently taken aback.
“IDF Radio" (Galei Zahal) reports that, at a meeting on Friday, senior Ministry of Finance officials lambasted Governor of the Bank of Israel Prof. Stanley Fischer. “IDF Radio" quotes an official as saying, "There's no limit to his audacity. This village lord from overseas comes here to teach us all about economics, and sets conditions: if I don’t get this, I'm going. It's an honor to serve the State of Israel, and if he doesn’t want it, we don’t need him. He's not doing us any favors."
Another official said, "He holds press conferences every other day so that everyone will praise him. The interest rate, unemployment, the consolidated State of the Economy Index, bonds - he's in the media every day. He's busy only with public relations, both inside Israel and internationally. He complains about endless leaks, but he doesn’t keep his own mouth shut. The whole media bows to his feet, while we end up as the bad guys."
The Bank of Israel said in response, "The Bank of Israel regrets the comments attributed to the Ministry of Finance. We'll continue cooperating with all parties in order to get through the economic crisis in the best possible way."
Regarding Fischer's demand that the Ministry of Finance Capital Markets, Insurance and Savings Division be merged with the Banking Supervision Division under the Bank of Israel, the ministry officials said that Fischer had previously rejected discussing capital market supervision, while they had agreed to hold a thorough discussion on the matter.
The Ministry of Finance officials say that Fischer's media appearances are overblown. They claim that the Bank of Israel has been zigzagging on its GDP growth forecasts. In addition, the Bank of Israel has consistently missed the inflation target every year since Fischer took up his post. In comments on Thursday, Fischer admitted that the Bank of Israel will miss the inflation target of 1-3% this year, for the fourth consecutive year.
In addition to merging the two regulatory agencies, Fischer's other two conditions for staying on for a second term are: passage of the new Bank of Israel Law and flexibility in setting salaries at the central bank.
Former Minister of Finance Yaakov Neeman told “IDF Radio", "I heard the comments, and I was shocked. Instead of creating an atmosphere of cooperation between the Ministry of Finance and the Bank of Israel, especially in times like these, they're undermining the Israeli economy - this is what the Ministry of Finance officials are doing?" He added, "If I were the finance minister in such times, anyone speaking in such a tone would be out on his ear."
Ministry of Finance Accountant General Shuki Oren told "Globes", "The comments heard on 'IDF Radio' today really infuriated me. The Bank of Israel's decision to intervene in the bond market does not break any law. There's no doubt that every action carries risks, but no law has been broken that I am aware of. I see these measures as positive, and I unequivocally support them."
Oren added, "I can say with authority that I work with the Bank of Israel on every measure, and I'm talking about cooperation at the highest level."
Oren declined to comment on Fischer's three conditions for staying on for a second term.
Minister of Finance Ronnie Bar-On said in response, "I do not share today's comments. The governor of the Bank of Israel makes a critical contribution to the Israeli economy."
Published by Globes [online], Israel business news - www.globes-online.com - on February 22, 2009
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