Federation of Israeli Chambers of Commerce president Uriel Lynn joined the supporters of National Economic Council head Prof. Avi Simhon's call for the Bank of Israel to halt its purchases of dollars. At the same time, he merely called on the Bank of Israel to "reconsider" its policy, and took issue with Simhon's comments about 20,000 industrial layoffs resulting from a halt in the purchases.
In an announcement published today, Lynn said, "The statement about layoff is obviously outrageous, but the emotional response to it should not prevent us from addressing the main issue and seriously considering whether the purchasing of dollars by the Bank of Israel when it has already accumulated $90 billion is the right thing to do, and should be continued." Lynn added that instead of dealing with emotional issues, it would right to "seriously and comprehensively consider the costs for Israel incurred in continuing this policy, and what the real benefits resulting from it are."
The Federation of Israeli Chambers of Commerce, which represents primarily importers, is the most recent important entity to take a position on the sensitive dispute that erupted in last week's cabinet meeting concerning the Bank of Israel's purchases of dollars. As reported exclusively in "Globes," Simhon called on the Bank of Israel to halt its purchases of dollars, now that its foreign currency reserves have exceeded $90 billion. Simhon argued that the balances do not support the economy, the return on them was negligible, and the cost of managing them was high. He said that there was no point in supporting an industry dependent on a depreciated exchange rate.
Simhon's position won support from many economists, but the Bank of Israel objected to it, and stated that there was no basis for it in the professional literature. The Histadrut (General Federation of Labor in Israel), Manufacturers Association of Israel, and the Israel Association of Electronics and Software Industries responded to the "Globes" report with severe condemnations of Simhon, who said that even if 20,000 workers were laid off in the export industries as a result of shekel appreciation, they would be absorbed in other economic sectors, headed by trade and services, which would grow as a result of the halt in the purchases of dollars. Histadrut chairman Adv. Avi Nisssenkorn also called on Prime Minister Benjamin Netanyahu to disavow Simhon's comments, since they were made by someone closely associated with him.
Published by Globes [online], Israel business news - www.globes-online.com - on June 5, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016