Governor of the Bank of Israel Stanley Fischer delivered a stiff warning today to the political leadership over the delays in the introduction of the government's rescue plan. Speaking at the annual conference of the Association of Publicly Traded Companies Fischer said, "The Israeli economy is clearly feeling the repercussions of the global crisis, both in the financial sector and in general. The slowdown in growth in the Israeli economy is expected to continue but it will be still positive, as opposed to the marked slowdown and even recession that we are now seeing in advanced economies."
Fischer was critical of the political leadership. "Unfortunately, the measures put forward by the Ministry of Finance remain stuck in the Knesset and are not being put into effect despite the consent of the prime minister," said the central bank governor. "This is waste of precious time that we could be using for the benefit of the economy. This has been going on for three months now, and we don't have three months. We are in the middle of a crisis. The matter is extremely urgent. Any further delay in carrying out these measures could erode both the economy's achievements and our ability to successfully cope with the challenges ahead. It is important that at a time like this with a general election ahead of us, we remain focused and act with the long-term view in mind. If we don't, we will pay a heavy price."
Commenting on the safety net for pensions Fischer added, "Yesterday, the prime minister took a decision regarding the safety net for savers close to retirement age. The Bank of Israel supports this proposal and also the need for it to be deployed immediately. Nevertheless, we view the safety net as an interim solution that is necessary for this point in time. It is important that we start giving some thought to changes in the structure of the pension system in Israel, so that we do not find ourselves with a situation where savers approaching retirement age lose a substantial portion of their pension savings. One option that could be considered is the Chilean model, whereby the savings of people close to retirement are switched to instruments with a fairly low risk."
Published by Globes [online], Israel business news - www.globes-online.com - on December 9, 2008
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