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The governor: "No taxes will be raised until the economy recovers"
The Governor of the Bank of Israel, Prof. Amir Yaron, referred to the Bank of Israel report, the steps taken during the corona and shared with Walla! Money his position on raising taxes.
On the credit rating, the governor said: "Israel is in a relatively good place" but added that the lack of an orderly budget may affect the rating in the future.
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Bank of Israel
Bank of Israel Governor
Amir Yaron
Bank of Israel report
Taxes
VAT
unemployment
Sonia Gorodisky
Tuesday, 06 April 2021, 15:14 Updated: 16:59
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Today (Tuesday), Governor Amir Yaron commented extensively on Israel's economic situation.
This was stated in the presentation of the Bank of Israel's report for 2020: “The countries of Israel are coming out of Corona long before other countries in the world.
The health crisis was accompanied by one of the most difficult economic crises the State of Israel has ever known.
I am pleased to announce that the Israeli economy could have a crisis. "
The governor added:" Of course that can not be taken lightly by tens of thousands of businesses were closed and hundreds of thousands of unemployed.
Government programs have greatly aided the public and minimized the irreversible impact of such a crisis.
"The Bank of Israel has taken unprecedented steps to enable the continued flow of credit in the economy to companies and the public and to prevent the flow of the economic crisis to the financial. Today, after the Israeli economy has demonstrated its resilience in the face of the crisis, it is important to maintain responsible fiscal conduct."
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The Governor and the Prime Minister with the report: Injured mainly 40+ people who were ejected from the labor force (Photo: Amos Ben Gershom, GPO)
"There is no need to extend the application"
The Governor addressed the issue of unemployment
is expected at the end of the leave period, subject that worries many industry heads "side of the employment we need to keep the policy of the leave until the end of June and there is now a need to announce the extension. Unemployed should get used to and try to get back into the labor force.
Together with That is, towards the end of the month we will have data on the employment situation in March and we will have more insights because we will have to regulate the sick leave and the continued assistance to the unemployed.
For example, a few days after the leave benefits are given, and we need these data that's important to understand whether the decline in unemployment is laterally then the policy is a policy, compared to the situation where unemployment Mmkodt industries such as tourism or hospitality services, then the policy should be different.
At the same time, all this time "It is appropriate to increase the control of the stabilization in the employment service. The recent period has affected the employment of the 40-plus age groups, it is more difficult for them to return to the employment circle, we must improve and expand the professional training system."
The Governor submits the report to the President.
"Tens of thousands of closed businesses cannot be taken lightly" (Photo: Mark Neiman, GPO)
Tax policy and credit rating
Regarding politicians' statements about lowering taxes and VAT
, especially after the formation of the government (if and when a new government is formed), the governor said: "If we talk about a temporary reduction in VAT, it can be of some importance: , So temporarily lowering VAT may help.
Right now with the opening of the economy we are also seeing a rapid return of demand so I would wait and see if things develop.
At the moment, there does not seem to be a need for this. "
Referring to the impact of the lack of budget on Israel's credit rating
, a topic many experts warn of, he replied:" The credit rating is relative, and Israel is in a relatively good position today. We are among the first to emerge from the crisis. The activity of the economy We see the increase in exports.
On the other hand, the same rating companies look at the government, the issue of the budget, the future vision of the debt-to-GDP ratio and future plans, and of course this aspect may affect how the country is viewed over time. "
"Do not see tax increases in 2021"
Asked "Walla! Money" about the timing of tax increases in
order to deal with the deficit, Yaron replied: "We issued a document a few months ago on a fiscal policy that is still valid - we do not see tax increases in 2021, and it will happen when the economy reaches a higher level of activity. "We do not currently have the ability to say exactly whether it will be in 2022 or slide into 2023 - this is exactly one of the issues we are focusing our work on."
Asked "Walla! Money" about the central bank's future monetary policy
, in terms of balancing interest rates and unemployment, Yaron replied that he was not worried about rising inflation again, but that inflation had fallen and that low interest rates were intended to raise it.
Yaron also says that interest rates will remain low over time: "In the context of the crisis, it is clear to us that it was very important to maintain real activity, inflation has fallen but is currently returning. The monetary expansion plans we have implemented, including the" low for longer ", are currently moving in the same direction. "Inflation, which is one of our goals and should also help the employment market. Our activities will support these two goals together."
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