A fundamental shift must be made in national priorities, including mass reallocation of budgets, over 300 distinguished economists penned in an open letter on Monday addressed to Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich.
In the letter, the economists expressed their concerns about the critical economic crisis facing Israel. They called for a fundamental shift in national priorities and a substantial reallocation of budgets to effectively address the fallout of the ongoing conflict, support those affected, and rebuild the economy.
“The severe blow that has befallen the State of Israel requires a fundamental change in the order of national priorities and a massive diversion of budgets in favor of dealing with the damage of the war, aid to the victims, and the restoration of the economy,” reads the letter, going on to estimate that the expected expenditure resulting from the ongoing conflict will amount to tens of billions of shekels, if not more.
The letter then underscores that the alterations to the State’s expenditure must be deep and thorough, noting that “cosmetic changes within the existing budget do not come close to the required scope of expenditure.”
Gov’t must face challenges head-on, economists say
“The government must face the challenges as soon as possible and try to restore the citizens’ trust in its ability to do so. A basic and necessary step for this is an immediate stop of the financing of all activities that are not essential to the war effort and the reconstruction of the economy, and first and foremost the coalition funds,” it continued.
The economists urged Netanyahu and Smotrich to reevaluate the 2023 budget as soon as possible, and to “immediately cancel all budget expenditures that are not essential at this difficult time.” As well, they strongly suggested that the budget for 2024 be opened soon, and updated according to the wartime economy’s pressing needs.
“We call on the prime minister and the finance minister to come to their senses! The continuation of the current conduct harms Israel’s economy, undermines the citizens’ trust in the public system, and undermines the State of Israel’s ability to recover from the situation in which it found itself.
Among the notable signatories are academics from Harvard University, Tel Aviv University and Hebrew University, a Nobel laureate professor, a former head of the Bank Supervision Department and General Accountant of the Finance Ministry, a former Governor of the Bank of Israel, two former Chairmen of the National Economic Council, and a former Deputy Governor of the Bank of Israel.
Last week, Smotrich declared the 2023-2024 national budget irrelevant due to the ongoing Gaza war. Smotrich’s focus is now on maintaining economic continuity during the war, with budget priorities shifting in response.