Fischer backs Steinitz: Now not the time for budget games

Stanley Fischer: We don’t have money to waste, and we have to keep what we have.

Governor of the Bank of Israel Prof. Stanley Fischer has thrown his support behind Minister of Finance Yuval Steinitz and ministry officials, who have been attacked for the wave of price rises. At the Herzliya Conference yesterday, Fischer made his first-ever comments about Prime Minister Benjamin Netanyahu's plans for changing the economic policies to "help the people".

"The government passed a responsible biennial budget six weeks ago, and we should demonstrate to ourselves and to the whole world that we are responsible and know how to keep the budget. This isn't the time to begin playing with the budget," said Fischer.

"We must not become addled because the government's tax receipts in 2010 were higher than expected. We don’t have money to waste, and we have to keep what we have. We must avoid populism. The political establishment should understand that we are in a period of uncertainty. The Ministry of Finance's conduct is completely proper, and the finance minister is right to keep the budget framework."

Referring to the events in Egypt, Fischer said that the economy's credit default spread (CDS) had soared from 115 points to 145 points within two weeks. "The Bank of Israel will do its part, the Ministry of Finance will do its part, and I expect every citizen to do his part. The markets are telling us something that we know: geopolitical risks have risen."

Fischer added, "We have a very strong economy, but we must manage it so that we can handle a future crisis or further deterioration from a position of strength, rather than from a position of weakness. If we conduct ourselves properly, we can deal with this. At the Bank of Israel, we must rein in inflation, and maintain price stability and high reserves, so that if needed, we can inject and preserve a strong banking system."

Published by Globes [online], Israel business news - www.globes-online.com - on February 9, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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