Resignation of Israel's Treasury Budget Chief May Portend Wave of Exits

Officials at the Finance Ministry attribute resignation to freshman minister Yair Lapid.

Gal Hershkovitz, who on Monday submitted his resignation as head of the Finance Ministry's budget division, may be the first of many top treasury officials on their way out.

The resignation will not cause a crisis for Finance Minister Yair Lapid; after two years in the post Hershkovitz plans to remain until the Knesset approves the 2013-2014 state budget, in early August. Moreover, his resignation plans have been an open secret in the ministry for weeks.

Hershkovitz is expected to return to private business. His replacement will likely be a senior figure in the division who worked with Finance Ministry Director General Yael Andorn, who was appointed by Lapid, in the 1990s.

Hershkovitz's deputy, Eyal Epstein, also submitted his resignation this week, effective in July.

Treasury officials attribute the resignations, as well as a sense of unease at the top of the ministry, to Lapid. The freshman minister has repeatedly made decisions based on consultations with outside economists rather than the ministry staff, said sources. And on more than one recent occasion senior officials have learned of Lapid's from the media.

Hershkovitz has reportedly complained that Andorn has usurped much of his authority as budget director since she become director general in April.

Hershkovitz, along with Prime Minister Benjamin Netanyahu and former Finance Minister Yuval Steinitz, have been criticized for failing to act to narrow Israel's growing budget deficit over the past year, thereby necessitating massive spending cuts and tax hikes.

Hershkovitz's defenders reject the criticism. They say he opposed Netanyahu and Steinitz's calls to reduce income and corporate taxes. His supporters say that last summer Hershkovitz led steps to raise NIS 10 billion from new taxes.

Yoel Naveh, director of the Postal Bank and a member of a new committee to examine corporate debt rescheduling agreements, has been mentioned as Hershkovitz's most likely replacement. Naveh is a former deputy budget division director.

Other possible candidates include three other former deputy division heads: Harel Belinda, Uzi Levy and Rotem Peleg.

Tomer Appelbaum