Prime Minister Ariel Sharon: Cuts will not be easy, but in order to grow, we must now act responsibly
Jerusalem, December 23, 2001
(Communicated by the Prime Minister's Media Adviser)
Prime Minister Ariel Sharon on Sunday, December 23, 2001, held a
press conference on economic policy with Finance Minister Silvan
Shalom and Bank of Israel Governor David Klein. The following is
the translated transcript of Prime Minister Sharon's speech:
Citizens of Israel,
Leadership requires determination, responsibility and courage.
Whether we are asked to demonstrate these qualities on the
battlefield, or whether we are asked to demonstrate them on the
minefield that is the economy. Whether the required decision is
to lead the troops from defeat to victory, or whether it is our
task to lead from an economic slowdown to growth.
We must courageously look into the eyes of the people and say:
this is the situation, and this is the course. We require courage
to make decisions, even, occasionally, unpopular ones. We require
determination to face the demands, justified as they may be, and
to say: today, there is none.
Citizens of Israel,
We have political strength and security strength. You know this
because it is due to you that we have this power. Today, we also
need economic strength and, only with you, only together, can we
achieve this goal.
The Israeli economy is now experiencing a severe recession. It is
clear to us all that the acute crisis that has befallen the
international economy - a crisis that has only intensified since
the terrorist attacks in the United States - is directly
impacting upon the Israeli economy. The security situation in
Israel, stemming from the war of terrorism forced upon us by the
Palestinian Authority, has exacerbated our economic
predicament.
But, citizens of Israel, let us not make any mistake. Economic
recession is not a decree from Heaven. We can and must emerge
from recession to lead the State of Israel back to the path of
growth and economic strength.
The way to growth is not easy. The recovery will be painful, as
it is all over the world. But in order to recover, treatment must
begin immediately. It will not be simple or short, but I can
promise you that it will steer Israel onto the right path of
prosperity and strength.
The primary objective of my government's economic policy is to
re-stimulate growth, while preserving economic stability. To
this
end, we must now implement a number of measures.
In the wake of the international economic crisis following the
terrorist attacks in the United States, the leading countries of
the world have revised their growth forecasts. In Israel, we have
also decided to adjust our growth forecast for the coming year
from four percent to two percent. At the same time, we have
decided to guarantee that the budget deficit, the overdraft of
the State of Israel, does not exceed three percent.
The adjustment of the growth forecast obliges us to cut over NIS
6 billion from the government budget. The cut will not be easy,
but in order to grow, we must now act responsibly. If we do not
act accordingly, we will be forsaking the future of the Israeli
economy.
Within the framework of the economic program, we will concentrate
the cuts in spheres that do not contribute to growth. At the same
time, we will increase, by as much as possible, government
budgets in areas that stimulate growth.
We will freeze all privately proposed acts of legislation. In
this framework, we will also freeze the Negev Law and the Large
Families Law, whose cost exceeds NIS 1 billion. I have supported
these laws in the past, in times of economic plenty, but the
situation is different today.
We will freeze certain budgets, and be unable to expand them. I
call on Members of the Knesset to demonstrate responsible
behavior, and to revoke the decision to enlarge their expense
budget. We who have been elected by the public must be the first
ones to set an example.
In order to stimulate growth, the government will refrain from
raising taxes. At the same time, we will enact a series of
measures designed to enhance the incentive to work among the
unemployed. We will also reduce unemployment by replacing foreign
laborers with Israeli workers, even in those professions in which
Israelis do not enjoy working.
Citizens of Israel,
This year's State Budget will be tough. But tough will not be
sufficient.
My government cannot ignore the needs and real troubles of parts
of Israeli society that, beyond any cuts, beyond any program or
streamlining, are entitled to live in dignity. These troubles
will be given specific attention in the State Budget, and we will
do all everything in our power to assist and respond to the
minimal needs that are essential for the sustenance of those who
go without.
The aim of the government's policy is to ensure the
re-stimulation of growth while maintaining stability. If we
succeed, we will be able in next year's budget to resume the
increase of budgets intended to improve the welfare of the entire
public.
Here with me today are my partners to the economic program.
Minister of Finance Silvan Shalom, and the Governor of the Bank
of Israel, Dr. David Klein. I have consulted with the finest
economic minds in Israel as well as with many other experts.
There were also proposals to arrive at a gradual solution, but in
light of the difficult situation, I decided to act in a sharp and
transparent way. The worst thing is to deceive ourselves.
The decision of the Governor of the Bank of Israel to reduce
interest rates by two percent, and the decision of the Finance
Ministry, with my full support, to give the Governor the
necessary monetary tools to implement his policy, emphasize the
importance we attribute to the independence of the Bank of Israel
in conducting monetary policy. The Bank of Israel will continue
to conduct a monetary policy that will ensure the stability of
prices, and support as much as possible the government's economic
objectives, including growth and employment.
Last Sunday, the government approved the proposals of the Finance
Ministry, which I supported, to cut over NIS 6 billion from the
State Budget. Tomorrow, the government will convene to approve
the cuts in each and every ministry. I call upon all the
Ministers to lend a hand and approve the proposed cuts. I know
that each of you bears responsibility for his ministry, but let
us not forget that, together, we share responsibility for the
entire country.
The economic policy of the government will ensure the fair and
just participation of all strata in society, and the achievement
of the goals that we have set for ourselves.
Citizens of Israel,
It would have been easier for me to come here today and give to
everyone. It would have been easier for me to come and say -
there is from where. But I love this land and I love this nation.
So today, I must - we all must - do the right thing.
I know the Israeli public. I know the people of Israel. I know
us. And I know that as difficult as it may be -we will confront
this together, we will work together and, together, we will bring
the State of Israel to plenty and economic prosperity. I am
convinced that the strong foundations of the Israeli economy will
allow us to return to sustained growth. This is the time to unite
together and get started.
Thank you.