Bank of Israel governor warns next government must curb defense spending and invest in growth

Bank of Israel Governor Amir Yaron warned at Calcalist’s National Economic Conference on Wednesday that Israel’s next government must curb defense spending and redirect resources towards economic growth. He stated, "First, our debt cannot continue to increase. Currently, we are on a path of rising debt," noting the debt-to-GDP ratio has reached 70%. Yaron emphasized the need to invest in education and infrastructure, and integrate groups like ultra-Orthodox Jews into the labor market. While the Bank of Israel recently cut interest rates, Yaron cautioned that monetary policy must remain careful due to ongoing price pressures, and suggested potential tax increases in 2027 to stabilize public finances, a view opposed by Finance Ministry Budget Director Maharan Frozenfar, who advocates for growth-boosting measures.