The first meeting of the EU-Israel Sub-Committee on Economic and Financial Matters took place today in the Ministry of Finance. Representatives from the Israeli Governement included Mr. Doron Cohen, Acting Director General of the Ministry of Finance, Mr. Oded Brook, Head of International Affairs Department in the Ministry of Finance, Mr. Gal Hershkovitz, Director of Budgets Department in the Ministry of Finance, Prof. Eugene Kandel, Head of the National Economic Council, and representatives from the Bank of Israel and the Central Bureau of Statistics.
The delegation from the European Commission, the European External Action Service and the European Central Bank was led by Mr. Andrew Standley, Head of EU Delegation to Israel. Economic counselors from a number of EU member states' embassies were also in attendance, including the United Kingdom, France, Germany, Belgium, The Netherlands, Romania, and more.
The meeting took place within the framework of the regular economic dialogue foreseen by the EU-Israel Association Agreement, and allowed an in-depth discussion of the economic situation in Israel and the EU, as well as the risks and opportunities for both economies.
Both the EU and the Israeli delegations presented the forecasts for their economies and their views on key fiscal and monetary policy challenges.
Regarding the EU economy, much of the discussion focused on the difficulties being experienced in the euro area's sovereign debt markets and the comprehensive policy response the EU is putting together. This response includes the adoption of fiscal consolidation packages by most euro area countries, the revamping of the architecture of macro-financial facilities (including the creation of the European Financial Stability Facility and the European Financial Stabilization Mechanism, both of which are to be replaced by a permanent mechanism entailing the reform of the EU treaty) and the strengthening of the EU's fiscal and macroeconomic surveillance framework and the intention to sign a new fiscal compact.
These presentations were followed by an exchange of ideas from both sides on the likely short- and medium-term scenarios for the euro zone and on the potential effects on the Israeli economy.
Regarding the macroeconomic trends and current challenges in Israel, on fiscal policy the Israeli representatives presented a detailed picture regarding the composition of growth, labor market, capital markets and external trade. Special focus was attributed to the issue of the fiscal challenges for the year 2012, which are mainly due to the shortfall in the tax revenue. The 2011 Israeli social protests led to a thorough reevaluation of the cost of living and purchasing power of the citizens and the results are summarized by the Trajtenberg Committee for Social and Economic Change. The recommendations of the Committee on Enhancing Competitiveness were also highlighted.
Regarding monetary policy, the representatives from the European Central Bank discussed the latest trends in inflation in the euro area and the EU and explained the European Central Bank's strategy and recent measures. There was also a discussion of inflation developments in Israel and the Bank of Israel's recent policy of intervention in foreign exchange markets.
In the area of statistical cooperation, both sides outlined their views on the recent developments and challenges for the Israeli statistical system, as well as the consequences stemming from
Israel's membership in the OECD. There was also discussion of the Memorandum of Understanding between Eurostat and Israel Central Bureau of Statistics on the exchange of data. Both parties also welcomed the fruitful and successful cooperation between the Eurostat and the Israel Central Bureau of Statistics, and agreed to favorably consider the extension of the Memorandum of Understanding on the exchange of data beyond 2013.
The two delegations agreed that the next Economic Dialogue meeting will be held in early 2013 in Brussels.