Governor of Bank of Israel Warns Defense Spending is too High
The Governor of the Bank of Israel, Stanley Fischer, has warned that if Israel continues to spend as it currently does on defense, the country could run into problems in the future.
Speaking at the Institute for National Security Studies Tuesday, Fischer said:”I just want you to look at public spending as a percentage of GDP. The source of the economic problems in the 1980s was the Yom Kippur War. It’s impossible to manage the budget when spending 20% of GDP on defense. Defense spending is now 6.5% of GDP, the lowest level since 1954, and very low in international comparison, which contributes to Israel’s growth. The level is going down, but in real terms, defense spending has actually grown. Defense is still the biggest budget item. Every Israeli who has served in the army can tell you about the waste and inefficiencies in the defense establishment and the IDF.”
Fischer added, “This year there is especially strong pressure on the defense budget. Including salaries, defense accounts for over 8% of GDP. There are good economic reasons to cut the budget. I know that protecting national security is the most important thing in Israel, but there is no need to exaggerate.”
Fischer also warned that although the Israeli economy is in good shape, if the demographic problems continue more problems will arise, and that Israel must avoid the Dutch disease from gas revenues.