Bank of Israel Governor Prof. Amir Yaron participated in the IMF's annual research conference and spoke on a panel on "Monetary Policy Challenges in a Global Economy." Among other things, the Governor emphasized the importance of fiscal responsibility on the part of the government by "cutting back on the less necessary activities in the 2023 and 2024 budgets."
Bank of Israel Governor Prof. Amir Yaron at the Finance Committee (Archive) // Knesset Channel
Prof. Yaron said, "I have no doubt that, as always, Israel will win and has the right ingredients to return to its great economic potential. We all hope for calmer and more peaceful times."
Alongside Governor Yaron, the panel included Jerome Powell, Chairman of the US Federal Reserve; Gita Gopinath, Deputy Director General of IMF; and Kenneth Rogoff, chair of international economics at Harvard University.
In his speech, the Governor dealt, among other things, with the security situation in Israel and the Bank of Israel's actions to help deal with the economic ramifications of the war.
"Fiscal policy is, of course, central and crucial to the economy's ability to overcome this crisis and resume growth in the medium and long terms. The government is working on various fiscal support programs, and the Bank plays a central role in advising, in its role as economic advisor to the government."
Bank of Israel Governor Prof. Amir Yaron participated in the IMF's annual research conference, photo: Bank of Israel
"The Bank of Israel declared the importance of finding a responsible balance between supporting the economy and maintaining a strong fiscal situation. Although it is clear that overall fiscal needs will increase, Israel's advice was to take advantage of the 2023 budget, but demonstrate fiscal responsibility by introducing a number of important adjustments and cutting back on less necessary activities in the 2023 and 2024 budgets."
According to the Governor, "The Israeli economy is strong and stable. It has strong and healthy economic fundamentals. We are a world leader in innovation and technology. The Israeli economy knew how to function and recover from difficult periods in the past and return to prosperity quickly. I have no doubt that it will be the same this time."
Yaron further noted that "over the years, Israel has demonstrated a responsible fiscal position, as proven by the path of decline in the debt to GDP ratio. Israel entered the war with a very strong fiscal position. Our debt to GDP ratio is just under 60% and a budget deficit, which was expected to be around 1.5% of GDP in 2023, following a surplus in 2022."
In conclusion, he said: "I have no doubt that, as always, Israel will win and it has the right ingredients to return to its great economic potential. We all hope for calmer and more peaceful times."
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