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Smotrich: Judicial reform protests have ‘minimal’ effect on economy

"The free market is smarter than the leaders of the barn-burning campaign thought," the finance minister said.

Israeli Finance Minister Bezalel Smotrich in Jerusalem, May 30, 2023. Photo by Yonatan Sindel/Flash90.
Israeli Finance Minister Bezalel Smotrich in Jerusalem, May 30, 2023. Photo by Yonatan Sindel/Flash90.

Israel’s economy remains stronger than those of many other developed nations, despite attempts by anti-judicial reform activists to “harm the economy as part of their political fight against the right-wing government,” Israeli Finance Minister Bezalel Smotrich said on Monday.

Submitting a mandatory report to the Knesset Finance Committee, Smotrich informed lawmakers that “the Israeli economy is strong and stable within the global sea of instability amid the international economic crisis.”

Still, while the Jewish state’s inflation rate, national interest rate and job market look better than in most countries, “it is not as good as we expected when we submitted the state budget” back in March, the Finance Ministry acknowledged.

“In addition to global inflation, there is an effect on the Israeli market through imports. This effect may intensify due to the weakening of the shekel,” explained Smotrich.

The ministry’s report also touched on claims that Israeli Prime Minister Benjamin Netanyahu’s drive for judicial reform has negatively affected the country’s economic situation.

“Huge forces with massive budgets and unprecedented media backing are slandering Israel throughout the economic world with bold lies and false scaremongering, doing everything they can to create panic and negative economic sentiment,” it noted.

“So far, it seems their influence on the economy is minuscule. The free market is smarter than the leaders of the barn-burning campaign thought,” stated Smotrich. “It understands the Israeli economy is strong, that our economic policies are correct, professional, and particularly consistent and restrained.”

“These trends will continue, with God’s help, and will allow us to continue marching the Israeli economy towards growth and prosperity,” concluded the finance minister.

Last month, Fitch Ratings likewise dispelled the notion that the coalition’s judicial reform plans had inflicted “significant” damage on the Israeli economy.

“In our view, we are likely to see new investments in Israel when the global trends turn,” Fitch Ratings analyst Cedric Berry said, reiterating the credit evaluation firm’s earlier assessment that attributed a drop in investments in the Jewish state to a worldwide trend.

On Aug. 14, Fitch Ratings reaffirmed Israel’s A+ score with a “stable” outlook, causing the Tel Aviv stock market to rise, and the shekel to strengthen against the dollar and the euro.

“Israel’s A+ rating balances a diversified, resilient and high value-added economy and strong external finances against a relatively high government debt/GDP ratio; ongoing security risks; and a record of unstable governments that have hindered policymaking,” Fitch said at the time.

Global credit ratings agency Moody’s has also maintained Israel’s “stable” A1 rating, while simultaneously warning of “negative consequences” for the country’s economy and security following the passing into law of key reform legislation.

Netanyahu has said that his government will seek an agreement with the opposition on the rest of the judicial reform package during the Knesset’s summer recess, which ends on Oct. 15.

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