Bank of Israel Governor Amir Yaron told Israel Army Radio it was the wrong way to help Israelis and the economy during the coronavirus pandemic.
By Paul Shindman, World Israel News
The head of Israel’s central bank on Thursday criticized Prime Minister Benjamin Netanyahu’s plan to hand out 6 billion shekels ($1.75 billion) in cash to Israelis in a bid to boost the sagging economy.
Bank of Israel Governor Amir Yaron said he was surprised to hear about the program and told Israel Army Radio it was the wrong way to help Israelis and the economy during the coronavirus pandemic.
“There are better and more effective ways to help and increase demand. We are partners in a large part of the decisions,” Yaron said, adding that he had not been consulted on the decision.
“I heard about it from the media,” Yaron said, his displeasure evident over the major decision that would normally have seen the government consult with the Bank of Israel before any announcement.
Instead of a blanket handout, the senior economist said the government could have taken other less costly, more targeted actions.
“It is possible to raise unemployment benefits, the grant for the self-employed, and help anyone affected by the crisis more than 90 percent,” Yaron said.
According to the plan announced Wednesday evening by Netanyahu and Finance Minister Yisrael Katz, families with one child will receive a grant of 2,000 shekels; a family with two children will receive 2,500 shekels and with three or more children 3,000 shekels. All other citizens aged 18 and older will receive 750 shekels each with the funds transferred through the Social Security system.
Netanyahu, himself a former finance minister who over the years has reduced government controls on large segments of the economy, said he intended to push through the transfer of the grants in the coming days, but the government first has to approve it.
The prime minister said he had Defense Minister Gantz’s support, which would leave Gantz little room for political maneuvering. However, it is not certain that his Blue and White party will give blind support to the move, Israel Army Radio reported.
Tagged by critics as an attempt to mimic U.S. President Franklin Roosevelt’s “New Deal” a century ago, one observer said the program should be checked before rushing to conclude that the grants were an attempt to “bribe the public.”
“For Roosevelt it did work, and in the fall of 1937 the American nation returned to its state before the Great Depression,” Prof. Yuval Albashan, dean of the law faculty of Ono College wrote in the Globes financial newspaper.
“Many economists attribute to his courageous plan, despite many flaws found in it, the rescue of the nation from the Depression and the return to paths of growth. Assuming we are dealing with a socio-economic crisis of a similar magnitude, it may work for us as well,” he said.