The senior Israeli economist Prof. Yaron Zelicha, who served as the Accountant General at the Ministry of Finance, and is the head of the accounting department at the Ono Academic College, was a guest on "Value added", the weekly economic podcast of "Israel Hayom". During the conversation he referred to the legal reform initiated by Minister of Justice Yariv Levin and the passing of the laws in the first reading in the Knesset plenum.
"There is no connection between the reform and the growth in the economy," said Prof. Zelicha.
"And if anything, if we make a balanced reform in the judicial system, it will even benefit the growth of the economy."
According to him, the erosion in the status of the shekel, the warnings of the banks around the world, as well as the fear of the decrease in investments stem from the noticeable social divide in Israel.
Will the reform affect the credit rating?
American bank JP Morgan (archive), photo: AFP
"A balanced reform will benefit growth in the Israeli economy."
The Stock Exchange in Tel Aviv (archive), photo: Yehoshua Yosef
"This should worry us. When investors, rating companies or banks see the riots and the huge demonstrations that slide into verbal violence, or calls to attack the head of government, and there is a very violent discourse - it definitely hurts, both the economy and society."
A rich government, a poor people
However, Prof. Zelicha warns against passing the amendments in the judicial system unilaterally and without forming broad agreements.
"When one side is not ready to listen to the plight of the other side, which intends to pass a unilateral and extreme reform - this is very dangerous for the Israeli economy and society."
"Unilateral reform".
Prime Minister Netanyahu with Ministers Levin, Kish and Dichter in the Knesset (archive), photo: Oren Ben Hakon
A responsible budget is needed.
Finance Minister Smotrich (archive), photo: Oren Ben Hakon
According to Prof. Zelicha, Israel's credit rating is derived from its ability to repay its debt in general and in foreign currency in particular.
"Our debt-to-GDP ratio is about 60%, one of the lowest in the OECD. We have a rich government, but a poor people. Moreover, I believe the Treasury intends to submit a responsible budget. When Britain submitted an irresponsible budget, the markets collapsed and the government fell."
According to him, he is done with the political episode.
Prof. Zelicha at the economic party conference he chaired (archive), photo: Gideon Markowitz
stop for boarding
Zelicha, who was not close to the percentage of the vote in the last elections, says that he has finished the political chapter of his life.
These days he is engaged in the field of real estate in Portugal at the same time as lectures at the Ono Academic College, where he serves as the head of the accounting department and provides financial advice to various entities.
Zelicha claims that the budget that will be submitted to the government tomorrow will not be able to stop the cost of living or housing prices.
Concern about the split in the people.
A demonstration against the legal reform in Jerusalem, photo: Reuters
"Interest rate increases by themselves will not help."
Governor of the Bank of Israel Amir Yaron, photo: Oren Ben Hakon
As for housing prices, he believes that the slowdown that began in the last two months in apartment prices is a "stop for an increase", and that apartment prices will continue to rise.
The professor is pessimistic about inflation in Israel, and claims that the government should also enter the picture in the fight to eradicate it and that raising interest rates by themselves will not help.
"Although the interest rate has risen significantly, it does not manage to deal with inflation, and at such a level of interest rate it will not be able to either. This raises a question - is the interest rate the appropriate tool to deal with this type of inflation that we have in Israel?"
Put your hands in your pocket
"Unlike the inflation that exists in Europe and the United States, which was driven by a problem in the supply sector, a lack of raw materials, in energy, that is, real price increases that were passed on to consumers, with us this part of the inflation is marginal," adds Zelicha. The banks, of the big importers who are not handled by the government."
Fear that housing prices will continue to rise.
Real estate projects (illustration), photo: Oren Ben Hakon
The governments broadcast to the importers: "It is not a shame to rob the citizens."
Disposable utensils in a supermarket (archive), photo: Dodo Greenspan
So what do you offer?
"The price the monopoly charges is not at all related to the cost, but only to the question of what is the maximum it can extort from us. In recent years, the governments have broadcast to the exclusive importers: 'Guys, it is not a shame to rob the Israeli consumer, inflate housing prices, add more taxes from property tax to disposable utensils ". The government was constantly looking for ways to put more and more hands in its pocket. Most of the price increases must be restrained through the treatment of the exclusive importers."
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