Bank of Israel Governor Stanley Fischer said Prime Minister Benjamin Netanyahu’s decision to call early elections in response to a budget impasse is a “good move” that will benefit the Middle East nation’s economy.
Netanyahu, 62, announced Oct. 9 in Jerusalem that he will “seek a renewed mandate,” citing opposition from partners in the coalition government to his austerity budget plan.
“It was a good move because in terms of economics, he could have got a budget through his coalition had it been a very expansionary budget, distributed money here and distributed money there,” Fischer, 68, said in a Bloomberg Television interview in Tokyo yesterday. “He chose not to do that.”
Netanyahu is trying to push through spending cuts as government revenue lags behind estimates amid a weakening world economy. The International Monetary Fund cut its global growth forecasts on Oct. 9 and warned of even slower expansion unless officials in the U.S. and Europe address threats to their economies.
The Israeli government’s deficit was 4.1 percent of gross domestic product in the 12 months through September, more than double the original target for 2012, the Finance Ministry said Sept. 4.
“This was, I see it, as a decision that we’re going to treat the economy seriously, we’re going to treat the budget seriously,” said Fischer, who has headed Israel’s central bank since 2005, accepting a second term in 2010. “I hope that’s what will come out of the new government when it’s formed. They’ve already started dealing with the budget problem a few months ago when they raised the taxes quite significantly.”
The government approved an increase in the value-added tax that started last month and higher income taxes starting in 2013 to help meet next year’s revised deficit target of 3 percent of GDP.
A poll published Sept. 28 by the Haaretz daily showed Netanyahu’s Likud party would win 28 places in the 120-seat Knesset, one more than it currently holds, making it the largest faction in parliament. The survey showed 35 percent of Israelis see Netanyahu as “most suited” to lead, almost double the 16 percent of his nearest contender for the premiership, Shelly Yacimovich of the Labor Party.