Former Minister of Finance, MK Silvan Shalom: "I think it is important to meet fiscal goals; it broadcasts credibility, and I think reforms are central. We are entering a period of rising inflation globally, and this is slowly starting to affect us, but our expectations of inflation have remained unchanged. The public is not hurrying to invest in bonds, even though those that have done so made a very good deal. There will always be a struggle between inflation and employment. We have to understand that you can't have everything. We are entering a year of slowdown –monetary and fiscal suffocation. The intervention of the Bank of Israel in the foreign exchange cannot be a long-term solution. I support lowering taxes, which needs to be speeded up. But we can't deny our social responsibilities. We need to change our priorities, and I believe that towards the 2009 budget, if you see the upcoming slowdown, you won't make the budget cuts, which will lead to the wrong results.
Manuel Trachtenberg, head of the National Economics Council: "All of the policy-makers agree upon a series of targets: We all agree the main goals are encouraging growth while closing social gaps and lowering the debt-product ratio. Everyone also agrees how to do it – control through an expenditure cap, better budgetary decision-making processes in the government, and the need for renewal, prioritizing, and reorganization. Within some ten years we must lower the debt-product ratio from 81% to 54% — which is the average ratio amongst comparable countries. The ways to achieve this goal is to set an expenditure cap each year according to a set formula, retaining a debt rate of 0%-1% throughout the business cycle, and even to have some surplus. Tax policy must be made contingent on to this policy – if there is a contradiction, taxes will adapt.
MK Stas Misezhnikov: "If we decide to invest in the periphery and its infrastructure, then we have pass bills that will support Eilat, for example, similar to the Sderot law. But not only the Knesset and the government are at fault. The government is committed to 13 billion NIS in wages, train development and defense, which will have to be cut on July 1st. Flat budget cuts of 8 billion NIS send it all to waste, and one of the problems is that the 1st of July is a law. We must bring about a rise in employment and a decline in poverty, and I didn't see any references to these goals in the 2009 budget. That is the problem – priorities. We are in an election year, to remind you. And there will be a crisis caused by the upcoming budget, because suddenly many MKs will discover they have social agenda. There are hidden and unhidden reserves – and ours are higher than those of other developed countries. We have 13 billion NIS that can be spent. The annulment of employers' tax saves us 1.5 billion, and there are more sources. As for inflation – because of growth, the level of available income has risen, this defines the inflationary pressure. As for the Dollar crisis – the governor of the Bank of Israel is doing a good job. He is trying to find his way between inflationary pressure and the Dollar crisis. Our problem is we have to fiscal policy to deal with this duality – on the one hand keeping inflation low, and on the other saving the export industries.
Finance Ministry Director General Yoram Ariav: "We are at a point of extreme uncertainty. Economics is first and foremost signals and expectations. And the signal of how the government is managing and guiding the budget is crucial, especially in times of uncertainty. We must continue our responsible fiscal policy. If we look for a guiding star – lowering the debt-product ratio is a worthy one. It seems that the fiscal rule of limiting expenditure will pay-off – the closer we come to our goal, the more leeway we will have. It is imperative that the goal and limitation of July 1st be retained for now. I am sure that the governor can conduct a broader monetary policy when he knows the government is acting properly in the fiscal area. Our argument is missing the point – raising the treasury's limits by tenths of a percent doesn't provide a real solution. The real problem we are facing is that we have been able to maintain an annual level of fiscal policy, but not a multi-year one. We make delayed commitments, and then when tomorrow comes, they can't be met. There is no multi-year expenditure cap. This issue should be tied together to the issue of achieving the goal we set in debt-product ratio.