New Finance Minister Bezalel Smotrich said he believes in free-market policies and intends to largely continue in the steps of his predecessor Avigdor Liberman, as he took over the treasury in a handover event Sunday.
“I am a free-market person and I want to remove barriers to encourage the free market and increase competition as much as possible,” Smotrich said at the ceremony in Jerusalem. “I’m not sure that all of our steps will be popular, but hopefully they will prove correct over time.”
Smotrich, head of the far-right Religious Zionism party, cited the rising cost of living in Israel as one of the main challenges facing Israel’s economy and emphasized the importance of maintaining budgetary discipline and fiscal restraint.
Previously, Smotrich had suggested that Torah laws would dictate Israel’s economic policies once he enters office.
“We are facing a challenging period of economic events such as inflation and interest rate increases, and I believe that we will overcome it and bring confidence into Israel’s financial system — and, as a result, investors,” Smotrich said.
Speaking before Smotrich, outgoing finance minister Liberman cautioned that the role of the Finance Ministry was not only to “guard the coffers” but to generate revenue to create a runway that will enable acting more freely in making budgetary decisions.
Liberman appeared to refer to coalition deals signed by the incoming government that are slated to increase welfare payouts for the ultra-Orthodox, whose employment rate is low.
Quoting from Pirkei Avot, a compilation of ethical teachings and maxims from Rabbinic Jewish tradition, Liberman warned: “Without flour [an allegory for work] there is no Torah, which is why you will need to produce a lot of flour in light of the demands of your partners [ultra-Orthodox parties Shas and United Torah Judaism].” He added: “There is no welfare without profits.”
“There are tremendous challenges here. Top of the list is the construction of the state budget,” he said.
Liberman urged Smotrich to work closely with Finance Ministry officials, whom he described as “smart and open-minded people.”
Smotrich said he had agreed with Liberman on many issues after the two held an hour-long meeting.
“I come here with a lot of humility and a desire to learn in order to advance the State of Israel, strengthen the economy and state revenues, and assist populations most in need,” Smotrich said. “Liberman has done a very good job here at the ministry and led brave and precedent-setting steps, and I hope to continue in his steps… to leave a stronger Finance Ministry for the minister who will come after me.”
Smotrich is taking over from Liberman with Israel’s economy set to slow down significantly this year and the cost of living on the rise, led by housing and energy prices. Prices for a range of essential services and products went up at midnight, saddling consumers with big rises in the cost of gasoline, water and electricity, as well as other items.
Inflation accelerated to 5.3 percent in November over the previous 12 months, hitting a new 14-year high and putting pressure on the central bank to hike the benchmark interest rate for a seventh straight meeting on Monday. The Finance Ministry in December cut its growth outlook for Israel’s economy from 3.5% to 3%, citing a contraction in consumer spending and a slowdown in the global economy, which is expected to grow at a rate of about 2.2%.
The economy is projected to have grown at a rate of 6.3% in 2022, following its even faster expansion of 8.1% in 2021, the year of recovery from the COVID-19 pandemic.