Netanyahu is responsible
Bank of Israel Governor Stanley Fischer's resignation comes on the heels of news that the budget deficit stands at an astounding NIS 39 billion and the consequent demotion of deputy budget director Eyal Epstein.
When it rains bad economic news, it pours. And over the past few weeks, Prime Minister Benjamin Netanyahu has been getting soaked.
First there was the news that the state budget deficit for 2012 was an astounding NIS 39 billion, making it clear to all that he and Finance Minister Yuval Steinitz had failed to manage the budget properly. Then came the reports that bringing the 2013 budget into line would require deep spending cuts and tax hikes totaling at least NIS 5 billion.
As things heated up and accusations started to fly in all directions, heads also began to roll. The first was that of Eyal Epstein, the deputy budget director, who was removed from his post on Monday. In fact, Epstein was one of the top professionals in the department; he’s the one who had warned against the government’s uncontrolled spending. He was demoted in order to provide the media with a scapegoat, so as to deflect blame from the current and past budget officials − including Steinitz.
When both the performance and the morale of the budget department are being undermined like this, the prime minister and the finance minister must intervene and cancel the dismissal. Some thought must be given to what’s good for the country, and Epstein is the best man to build the 2013 budget.
Now we have Bank of Israel Governor Stanley Fischer’s decision to leave his post in June, two years before the end of his term. Netanyahu is the one who brought him to Israel from the United States, appointing him central bank governor in 2005.
Fischer’s resignation raises some questions. Is it a vote of no-confidence in Netanyahu and Steinitz? After all, Fischer wants next year’s deficit to be 2.5 percent, not 3 percent, but the two would not accept his opinion. Fischer has also issued scathing criticism of the budget deficit, saying there will be a need for deep cuts and higher taxes; this is in contrast to Netanyahu and Steinitz, who have been insisting there won’t be any need for tax hikes.
Perhaps he simply wants to return to the United States, to his children. Maybe he got a great job offer abroad. Maybe it’s all of the above.
In any case, not only must Netanyahu put the treasury’s budget department back on track − he has to find a new Bank of Israel governor with a stature on par with Fischer’s.