Bank of Israel governor warns judicial overhaul could harm the economy
The Bank of Israel's chief repeated a recent warning that Israel's current government’s judicial overhaul plan could potentially harm the Jewish state’s economy.
During an interview with Globes - Israel Business News outlet, the bank's governor, Amir Yaron, stressed that the judicial reform plans created unwelcome uncertainty for domestic and international investors.
"I would like to say a few words about the judicial reform's impact on the economy, which has been on the public agenda over recent months. I have said several times in the past that due to the promotion of such reforms, there was an increase in the level of uncertainty in Israel’s economy, reflected in, among other things, the excess depreciation of the shekel and the underperformance of Israel’s stock market,” Yaron warned.
He said the top priority for the sector going forward should be to restore stability and investors’ confidence in the Jewish state’s economy.
"Continued uncertainty is liable to have notable economic costs, as reflected in the risks to the Research Department’s forecast, and some of which I noted earlier in my remarks. The IMF has also indicated, in its most recent report, the adverse impact from the continued uncertainty over time," Yaron stated, referring to a report released by the International Monetary Fund, an organization established in 1944 to build a framework for international economic cooperation.
"Therefore, it is important to bring back the stability and certainty to the Israeli economy, and to verify that legislative changes will be carried out with broad agreement, and will maintain the strength and independence of the institutions,” he added.
As a comparatively small and export-oriented economy, Israel is highly dependent upon exporting its products and services worldwide. This is particularly true for Israel's high-tech sector, which represents more than 50% of the Jewish state's total export.
In January, two former Bank of Israel chiefs, Karnit Flug and Jacob Frenkel, publicly warned the Israeli economy could suffer “a severe blow” as a result of the government’s controversial judicial reform plans.
The All Israel News Staff is a team of journalists in Israel.
