Jerusalem, Nov 15: Bank of Israel Governor Jacob Frenkel, whose tight monetary policies helped slash inflation but angered politicians and industrialists, announced Sunday he was resigning effective January 2. His resignation after nearly nine years in office appeared to clear the way for prime minister Ehud Barak -- under pressure to make good on campaign pledges to jump-start a sluggish economy -- to appoint a successor who might loosen monetary reins."The time has come today to announce my decision to resign from my post at the start of the next millennium, at the start of 2000, after I was privileged to serve the state of Israel and its economy for close to a decade," he told a news conference. At a press gathering attended by Barak and finance minister Abraham Shohat, Frenkel said he decided to quit eight months before the end of his second five-year term because he had largely achieved the goals he had set out when he took the job.
"Inflation has reached close to the levels in industrialised countries, the forex markets have been liberalised, the exchange rate regime has become much more flexible, capital and financial markets are integrated and the banking system is...robust," he said. Barak said he would "identify and appoint" a successor as soon as possible.
The Israeli leader said he himself was an advocate of a"tight, fiscal and monetary policy." But he added it must "provide the basis for renewed growth in our economy."
Israel's economy has been mired in a three-year slow down and rising unemployment, now close to 9 per cent. The Central Bureau of Statistics has forecast only 2 growth this year. Experts estimate inflation at around 2 per cent, well below the government's target for 1999. Barak has come under fire from coalition partners and in the media for what critics view as his failure to fulfil pledges from last May's election to help Israel's poor by fighting unemployment and boosting economic activity.
Interest rates, which Frenkel has stubbornly refused to lower since August in tandem with falling inflationary expectations, are currently an annual 11.5 per cent.
"In no way can we say that we can rest on our laurels because that is a recipe for non-growth," Frenkel told the news conference. "The sense of great satisfaction I now have stems from the fact that we are on the right track." The resignation was immediately welcomed by one of Israel's leading businessmen, Frenkel's long-time nemesis Dan Propper, chief executive officer of the Osem food concern. "If this step had been taken two years ago, I have no doubt the economy would be flourishing," Propper, a former head of the Manufacturers' Association, said. Some economists said, the departure of Israel's champion of monetary restraint would have a negative impact on markets.--Reuters
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.