Bezalel Smotrich is pursuing an irresponsible economic policy in wartime and refusing to draft a national budget for 2025. Such a budget should account for the war's heavy expenditures and his own duty to prevent an economic crisis. The finance minister is demanding that Finance Ministry officials exceed the already large budget framework for 2024 and violate spending guidelines. When senior ministry officials warn him that this is a dangerous move that could damage the government's credibility, his reactions are extreme.
This week, he sent a strongly worded letter to the head of the ministry's budget department, Yogev Gradus, and suggested that he resign. "As long as you do not identify with my economic policy, you are welcome to return the keys," Smotrich wrote. However, Gradus is simply presenting the minister with a professional opinion demanding responsible management of the national budget despite – and because of – the cost of the war. But what do Smotrich and his cabinet colleagues care about professionalism, practicality or the good of the country?
Smotrich chooses the path that this government has taken since it was formed. It privileges political interests over professional conduct, weakens the professional ranks and slights the public interest while ignoring the destruction of value in every sphere in Israel. This behavior extracts heavy and measurable tolls. The "big three" international credit reporting agencies have downgraded Israel's credit rating and have issued a negative outlook, threatening additional ratings downgrades in the medium term.
The cost of the downgrade is clear: Israel's risk premium has soared, foreign investments have plunged, the Tel Aviv Stock Exchange is under-performing against world markets, and the costs of servicing national debt have ballooned and will continue to balloon. The Finance Ministry is trying to avoid foreign loans due to their high cost, and in the meantime is funding government activity by raising debt in the local capital market.
The government has not made ending the war a goal for the foreseeable future, meaning that both spending and uncertainty will increase. This situation demands responsible budget management, the setting of priorities, efficiency and a continuous effort to avert an economic crisis.
The finance minister, however, does not have such a policy. He prefers complete subordination to the goals of preserving the governing coalition and cultivating the groups it comprises, especially his own. The minister endangers Israel's economy when he refuses to draft a responsible budget containing the components needed to prevent an economic crisis, and he conveys panic and irresponsibility when he suggests that those who tell him the truth should hand in their keys.
Smotrich is the one who needs to turn in his keys so that the Israeli economy can weather this crisis.
The above article is Haaretz's lead editorial, as published in the Hebrew and English newspapers in Israel.