Israel's political leadership yesterday sought to quell fears that the global financial crisis would wreak havoc on the country's economy, as Tel Aviv stocks plunged. However, Finance Minister Roni Bar-On also warned against any attempts to increase the 2009 budget because of the crisis.

After the Tel Aviv Stock Exchange opened to heavy losses yesterday morning, Finance Minister Roni Bar-On said the country's financial leadership was not panicking in the face of the global crisis.

"We are cooperating with the Bank of Israel and the banks, and at this time there is no sign of real fear. We mustn't deviate from our budgetary targets," Bar-On said during a meeting of Kadima ministers. Outgoing Prime Minister Ehud Olmert also aimed to calm nerves over the financial crisis.

"The situation in global markets was on the agenda last week and we have been continuously discussing it with the finance minister and the governor of the Bank of Israel in order to monitor the situation," he said at the meeting. "This has been done with utmost responsibility and the necessary awareness."

For the first time yesterday, the cabinet discussed the financial crisis and its effects on Israel at its regular Sunday meeting - though the discussion was short and superficial. Bar-On summarized the situation in Israel and around the world, and said the approval of next year's budget in August was a good move.

While noting it was unclear how the crisis would affect Israel, he stated that for now, there is no real reason to worry. His warning about next year's budget was more than a hint about the coalition negotiations Tzipi Livni is currently conducting to form a new government.

At a meeting on the eve of Rosh Hashanah, Bar-On and Bank of Israel governor Stanley Fischer had decided that Bar-On would stay home and not attend the International Monetary Fund and World Bank annual meetings next week, and that Fischer would represent Israel there instead.