Treasury chief rejects spending cuts

Yarom Ariav: We will not cut government spending, even the deficit widens.

The Ministry of Finance does not intend to cut government spending in 2008, even if the budget deficit widens, director general Yarom Ariav declared at a conference yesterday. He made the comments in response to a report by the Israel Tax Authority which predicts a slowdown in tax collections this year. Ariav, who was speaking at the first annual conference on public sector pay organized by Ministry of Finance director of wages Eli Cohen, explained that the economy has different mechanisms that can be adjusted without cutting spending, although the situation needs to be monitored closely.

According to Ariav, while there had been NIS 1 billion in surplus tax collections over the last four months, economic indicators are usually delayed. He remained optimistic, however, about the global crisis. "Clearly, when there's an economic tsunami, or an event like the one in the US, it will inevitably affect us. But the further away we are from the epicenter, and the more effort we make to ensure the right foundations are in place, the better equipped we will be to cope with the crisis."

Minister of Finance Ronnie Bar-On, who also spoke at the same event, surprised participants by departing from his prepared speech and talking instead about the plight of contractor employees. "It is an absolute disgrace that in 21st century Israel, we still have people who are being perpetually exploited, and I am ashamed to say that it is also happening in the public sector. Justice should begin at home, and that means us, the country's largest employer," he said.

Published by Globes [online], Israel business news - www.globes-online.com - on May 5, 2008

© Copyright of Globes Publisher Itonut (1983) Ltd. 2008

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