In the light of recent disagreements with the Bank of Israel regarding the assessment of the actions of the present government, the Finance Ministry reported on March 28 that Karnit Flug will not remain as Governor of the Bank for another term.
According to the report, after the Passover, the Ministry of Finance will begin the search for a new head of the Central Bank.
Cadence Carnet Plug, appointed in 2013, expires in November.
Note that on March 28 the Bank of Israel published a report on the state of the economy in 2017. Commenting on the activities of the government, the Bank of Israel urged to stop tax cuts and initiate the abolition of unjustified tax benefits, simultaneously increasing social spending of the government.
In the report it was noted that the activities of the government in the current format is based on a one-time tax revenue, and that in the absence of changes in 2022, the government will have to raise at least 12 billion shekels to cover commitments. The Central Bank also recommended the government to consider the economic cycle and set aside funds for a «rainy day» to preserve freedom of action, when the country was a crisis and will require substantial public funding to overcome it.
In addition, the Bank of Israel reacted negatively to the project of the Ministry of Finance «Housing for newcomers».
In response, the press service of the Ministry of Finance issued a statement which said that «after 12 years of growth the Ministry of Finance managed to reduce housing prices, lower taxes and facilitate the growth of the Israeli economy. All this was done in spite of interference and obstacles from the Bank of Israel. Unfortunately, the Bank of Israel continues to pursue a policy that serves only certain groups of interested parties».