Bank of Israel governor Stanley Fischer on Thursday took aim at the Netanyahu government's plan to increase Israel’s deficit spending to 3%.
"We need to reduce the current deficit level of 2.5%," Fischer said. "This country needs to show that it intends to continue a strong fiscal policy, more similar to that of Finland than of most of the countries in Europe's weak economy."
"We need to formulate a realistic budget, convincing everyone that the government itself, the markets, and especially the citizens of Israel believe in a policy of maintaining a stable economy," Fischer explained.
"We have to maintain our desire to be a country with strong economy for years to come. If we raise the deficit we cannot convince the world [to invest here]," he explained.
Fisher stressed, "I see the economy's strength as being no less important to the survival of the state than military strength. If we do not preserve the economy we cannot successfully meet the other challenges we face."
"There are cynical people who say we cannot handle this right now because there is trouble on the horizon. This is not acceptable," Fischer said in no uncertain terms. "If we want the lame economy of the late '70s and early '80s, we can continue on the [government's] present course."
"The probability that Israel will face a difficult financial crisis like that in Europe [as a result of this plan] is less than 50%," Fischer said.
However, he added, "But anyone who has seen Forrest Gump knows: things happen."
Prime Minister Binyamin Netanyahu's proposed deficit spending increase would bring the government a short-term gain of some 15 billion at the cost of increasing Israel's long-term national debt.