In the wake of record-setting foreign investment in Israel, the Finance Ministry is currently putting the finishing touches on a new economic program that will include further tax cuts for the lower and middle classes, Finance Minister Benjamin Netanyahu told the Knesset Finance Committee yesterday.
Such cuts will encourage economic growth and reduce social gaps, Netanyahu said, but he declined to say when the plan would be ready.
Netanyahu said that Israel is currently enjoying an economic boom.
"There has been a huge increase in foreign investment in Israel," he said. "These investments have even surpassed the peak recorded in 2000, the most euphoric and successful year in the history of the state. In the first quarter of this year, foreign investment totaled almost $5 billion - and that does not include the sale of Bezeq."
In the first quarter of 2000, he noted, foreign investment totaled $2.9 billion. It then fell to $1.33 billion in the first quarter of 2001 and $875 million in January-March 2002, before rising again to $1.5 billion in the first quarter of 2003, and $1.66 billion in the first quarter OF 2004.
"The government's policy is working," he concluded. "The economic program [of June 2003] has proven to be the only `social' program. We will continue this policy, so that we can help those who have been unable to enter the ranks of the employed."
Netanyahu also noted that the country's ratio of debt to gross domestic product recently fell by 1 percent, and that he intends to continue trying to lower this ratio. The planned privatization of Bank Leumi will further this goal, he said.
Netanyahu said that the government would make every effort to pass through the Knesset the Bachar Committee's proposed reforms of the capital market, during the summer session that began yesterday. He termed this reform - whose main element is separating the banks from their mutual and provident funds - the most important of his stint as finance minister.