'Policies are working.' Fischer
Photo: Dudi Vaaknin
Fischer says budget deficits too high
Bank of Israel governor says government should offset higher spending levels by raising taxes so that deficits do not increase, adding central bank continuing to pursue expansionary monetary policies
Bank of Israel Governor Stanley Fischer on Wednesday expressed dissatisfaction with the 2009 and 2010 state budgets, saying the deficits will be too high.
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Speaking at a financial markets conference, Fischer said the government should offset higher spending levels by raising taxes so that the deficits do not increase.
"In particular, most of the financing could come from delaying the income tax cuts planned for 2010," he said.
Fischer said the government should compensate for a high deficit in 2009 by lowering the planned deficit for 2010.
The budget projects a deficit this year of 6 percent of gross domestic product and 5.5 percent in 2010 but Fischer said he supported a deficit of 6.5 percent this year and 5 percent in 2010 with further declines in years to come.
His comments followed the resignation earlier on Wednesday of Israel's budget director Ram Belinkov after the cabinet approved 2009 and 2010 budgets that included major changes in response to political and trade union pressure for fewer spending cuts.
Fischer also said the central bank was continuing to pursue expansionary monetary policies and will do so as long as inflation remains within a 1-3 percent annual target.
"I believe the policies are working and contributing to the revival of the financial markets and to the recovery of the economy," he said.
