After marathon discussions, which began on Thursday, senior officials at the Ministry of Finance, together with their counterparts at the Bank of Israel and Israel Securities Authority, will complete formulation of an initial package to assist Israel's capital market. As "Globes" revealed last Friday, the plan does not include a single measure but rather a package of measures that together will encourage investors on Israel's capital market and lower the level of panic that currently reigns. The assistance package has today been submitted for approval by the government's Attorney General, Menachem Mazuz, to ascertain that the plan cannot be perceived as "election economics."
"Globes" has also been informed that the assistance package probably includes a limited safety net for those about to become pensioners and who will not benefit from the next rise in the capital market. Even so, the Ministry of Finance's proposal for a safety net includes incomes and assets tests and will not be "universal" and automatically granted to all new pensioners. Throughout the weekend, Ministry of Finance officials tried to overcome the operative, legal and bureaucratic difficulties associated with the measures being formulated including the provision of such a safety net dependent on a means test. Discussions are still carrying on at the Ministry of Finance to finalize the details of the plan.
The assistance package was put together under great pressure from the political and banking systems and especially strike threats from the Histadrut (General Federation of Labor in Israel), which have yet to be removed. The Ministry of Finance is vehemently opposed to a general safety net for pension savings following the falls over recent months on the TASE.
A senior official in the Ministry of Finance told "Globes" that the aim of the plan is to give a morale boost to investors, which according to the pricing of stocks and particularly corporate bonds, reflect an atmosphere of panic and loss of market confidence.
"The moment investors see we are intervening, they will understand that the government is behind them and that will encourage them to return to the market, and will pull investment committee, out of the stalemate they have fallen into," explained a senior Ministry of Finance official.
Published by Globes [online], Israel business news - www.globes-online.com - on November 23, 2008
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