Bethel Finance: Steinitz calls for fiscal restraint

www.bethelfinance.com "We at the Ministry of Finance are beginning to prepare the budget for 2013, and maybe for 2014, too. This will not be an easy budget," said Minister of Finance Yuval Steinitz at the "Globes" Finance and Capital Markets Conference today, as he took the opportunity to prepare the public for a wave of tax hikes and budget cuts. Steinitz warned, "Economic responsibility and fiscal discipline are critical conditions for continuing our ability to maintain rapid growth and low unemployment. There are worrying signs in the world. There is the risk that the euro will collapse, deteriorating governance in Europe, slower than expected recovery in key global economies, and so on." The Ministry of Finance predicts 3.2% GDP growth this year, and Steinitz said, "We will do what it takes to achieve higher growth." He said that Israel had the fastest growth rate in the West in 2011, due to an increase in foreign investment. Steinitz said, "There is a global battle against mass unemployment, which is affecting tens of millions of people, if not hundreds of millions. We see that despite the crisis, we expanded participation in the labor force, but since the peak of the crisis, we've seen a drop in unemployment. The method of measuring is less important - in any case, Israel is one of the few countries where the unemployment is lower than before the crisis." As for S&P's credit rating, Steinitz said, "Israel is the only country in the West whose credit rating has been raised in the past three years. Why is this important? It is critical because investors in the world feel that Israel is managed responsibly, it didn’t panic during the crisis and inject massive amounts of money." Speaking at length on the budget and the necessary cuts in it, Steinitz said, "To preserve the economy and the public, we must show responsibility and thought. As I have already said, this is going to be a difficult budget, and at the moment we are only processing the preliminary data related to the budget. I am sometimes amazed that the media knows things that the Finance Ministry does not about budget data. The next budget will require restraint to meet Israel's fiscal framework."