Bar-On: Blocking Stimulus Plans Endangers Economy

Finance Minister Roni Bar-On will present a survey of the economic situation to the cabinet at its regular weekly meeting today. The survey will focus on the Israeli economy in light of the world economic crisis, and its effects here.

Tomorrow, a group of senior officials from the treasury, Bank of Israel and the Prime Minister's Office will present its plan on the safety net for pension savings.

Bar-On's presentation to the cabinet will focus on the treasury's economic stimulus plan, which has two main parts: massive investments in infrastructure and a financial plan to increase the availability of liquidity to provide more credit.

He will tell the cabinet that the chairman of the Knesset Finance Committee, Prof. Avishay Braverman (Labor), made a serious mistake last week when he refused to hold a vote on the treasury's economic stimulus plans as the cabinet had yet to present a safety net proposal to the committee alongside the two other plans.

Bar-On intends to explain to his fellow ministers that every additional day of delay in approving the two plans harms the economy.

Without approval of the emergency plans, state spending and operations could possibly stall or be frozen, in particular since the 2009 state budget has yet to be approved, and will almost certainly not be passed until well after the February elections.

The lack of an approved budget, Bar-On will explain to the cabinet, will adversely affect the economy and growth.

The senior working group on the pension savings safety net will finish its work today and present its recommendations tomorrow to Prime Minister Ehud Olmert and Bar-On.

The working group includes four senior officials from the Finance Ministry: Director General Yarom Ariav; Budgets Director Ram Belinkov; Commissioner of Capital Markets, Insurance and Savings Yadin Antebi and Accountant General Yehoshua (Shuki) Oren.

The Bank of Israel's representative to the working group is Deputy Governor Prof. Zvi Eckstein. Prof. Manuel Trajtenberg, the head of the National Economic Council in the Prime Minister's Office, is also a member.

Over the last week and a half, the treasury officials worked hard - and succeeded - in convincing the other two members, Eckstein and Trajtenberg, that such a pension savings safety net is an inefficient economic solution, and is not the correct answer considering the resources available to the state and the economy.

The treasury's position is that such a plan would benefit a small number of people at the expense of the broader public, and such a safety net would mortgage away the state budget for years to come.

The prime minister supports a broader safety net, though he has no specific plan of his own, while Bar-On strongly objects to any expansion of the programs.