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Netanyahu meets with Bank of Israel head about financial fallout from court overhaul

Prime Minister Benjamin Netanyahu is consulting with Bank of Israel governor Amir Yaron, given warnings that government plans to upend Israel’s judiciary could scare away investors and have impact on the country’s credit rating, the Kan broadcaster reports.

The Bank of Israel recently sent the Finance Ministry a list of concerns raised by international ratings agencies, Channel 12 news reported Monday.

The meeting comes hours after hundreds of tech workers held an hour-long warning strike to protest the planned changes.

On Sunday, former Bank of Israel governors Karnit Flug and Jacob Frenkel warned in a joint op-ed that the government’s plans for a sweeping overhaul of the country’s judiciary could negatively affect Israel’s credit rating, and “deal a severe blow to the economy and its citizens.”

Governor of the Bank of Israel Amir Yaron attends a press conference on March 31, 2019. (Yonatan Sindel/ Flash90)

“The weakening of the judiciary system (…) is expected to lead to a decrease in the willingness of foreign investors to invest in Israel, and an increase in the cost of raising funds for the Israeli government as a result of a possible downgrading in the country’s credit rating,” Flug and Frenkel explained.

The credit rating agency Standard & Poor’s (S&P) said earlier this month that the judicial makeover plans, as well as the new government’s hardline policies in the West Bank, could negatively affect the country’s rating.

S&P’s Director of Global Ratings Maxim Rybnikov told Reuters: “If the announced judicial system changes set a trend for weakening Israel’s institutional arrangements and existing checks and balances this could in the future present downside risks to the ratings.”

The talks with Yaron follow a meeting between Netanyahu and Finance Minister Bezalel Smotrich aimed at setting the new government’s fiduciary policies.

According to a joint statement, the two agreed to maintain a responsible fiduciary course and to coordinate the government’s positions with the Bank of Israel’s monetary policy.

Smotrich says a budget for the coming year will be unveiled “very soon.”

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