Good evening.

It is my pleasure to congratulate Governor Dr. David Klein, the Directors and staff on the occasion of the Bank of Israel’s 50th Anniversary.

The Bank of Israel was established in a young state, inexperienced in financial management, following a harsh war, at a time when the economy was weak and facing tremendous problems of rehabilitation, immigrant absorption and the building of an independent economy.

Today, the 29th of November, as we mark 57 years since the UN Resolution to establish the Jewish State, we pay tribute to the generation which led the people of Israel during that period – the generation of the founders.  One of the accomplishments of this generation was their ability to understand the importance of building a central bank which would be completely independent, which would not be subjugated to political, factional or sectarian considerations.  They built an institution which, from that time to date, has successfully navigated an independent and wise policy, balanced and responsible, which contributed greatly to the tremendous economic achievements of the State of Israel.

If only one decade ago, anyone had dared to predict that in the State of Israel – despite serious security concerns and in conditions of a global crisis – the rate of inflation would hold steady at approximately 1% per annum, price stability and the long-term exchange rate would be maintained, and that all this occurred with an accompanying growth of approximately 4% per annum – he would have been considered insane or at least delusional.

Reality has surpassed all our expectations.  For this, we must thank and congratulate all the governors of the Bank of Israel from its inception till this day.

It is an indisputable fact that the Bank of Israel enjoys great prestige worldwide, whose experts are frequently invited to advise various countries in planning monetary policy, and the success of which serves as a model for many countries.  We can all be grateful for this institution and its many accomplishments.

It is our task to preserve this important legacy, first and foremost, the total independence of the Bank of Israel.  The Bank’s independence, and its ability to face the government and political system, and to stand as a fortified barrier to maintain price stability, is essential to the continued development of the Israeli economy.

These facts hold special significance today, in light of the challenges the Israeli economy faces.
My Government’s economic policy rests on the fundamental premise that Israel’s economy is today integrated into the global economy.  From this we derive the four pillars on which the Israeli economy is based.

• First – rigid budgetary discipline and the preservation of a path towards decreasing government deficit will create conditions favoring monetary stability and the reduction of interest by the central bank.
• Second – comprehensive reforms in the structure of the economy, headed by the reform to bring about more transparency and improvement of the capital market and structural reforms, the purpose of which is to increase competition and transparency in the economy in general.
• Third – increasing investment in infrastructure which generate growth while encouraging maximum cooperation with the private sector, and encouraging investment by foreign investors who wish to enjoy the high yields that the emerging Israeli economy can promise.
• And last – a policy of growth and new job creation in the private sector over the public sector.

Of course, this is not an easy task.  There are many pressures from various directions.  Every day, we learn of a new political or sectarian element which is trying to get just a little bit more, and is even willing to undermine the political stability and the entire economic system to achieve its goal.

I can assure you that my Government does not intend to surrender to political and populist pressures of any kind.  This coming Wednesday, I intend to present the State Budget in the Knesset for a first vote.  This is a budget which adheres to all the conditions I stated here.  This is a budget which ensures the ability of the Israeli economy to continue to develop.  Due to this stance, even the political payments which are necessary to pass the budget do not threaten either the framework or the central goals of the budget.

I am sorry that there are those who cannot understand the supreme importance of passing the budget now, and who are willing to undermine the financial and political stability in order to score public relations points.  The result of such ultimatums may be early elections.  There is no need for this.

Early elections will cost much more than any of the steps we have taken to achieve a majority for the budget.  They will adversely affect the Government’s ability to determinedly advance the implementation the Disengagement Plan - the Disengagement Plan which I plan to implement, exactly as was confirmed in the Government and the Knesset by a large majority.  They will place a question mark over the intention of the Government to manage a responsible budgetary policy.

The responsibility for this is placed solely on the shoulders of those who are undermining the political stability in order to score points with some sectors of voters.  I have said, elections at this time – is a great danger – economically as well as politically.  I would like to say that – an additional option is to broaden the coalition, and I will make every effort to achieve this.

I will not be deterred by threats and ultimatums.  There will be no “election economy”.  Under no conditions will there be any deviation or overspill from the budgetary framework.  If we are forced to run for election again, for the third time in three and a half years, then we will do so, despite the fact that it is completely unnecessary.  In any event, my Government and I will continue to act with national responsibility, while placing the good of the country first.  This is how we have conducted ourselves until now – and we intend to continue to do so in the future.

Thank you.