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Decision on second term of Bank of Israel governor will be made in October

Bank of Israel governor Amir Yaron and Prime Minister Benjamin Netanyahu agree to announce a decision about the extension of the former’s tenure after the Jewish holidays

Sharon Wrobel is a tech reporter for The Times of Israel.

Bank of Israel governor Amir Yaron on Sunday reiterated his plea to Prime Minister Benjamin Netanyahu to advance proposed changes to the country’s judicial system only with broad public consensus as the two discussed a possible extension of the central bank head’s term.

During the meeting, Yaron, who is due to end his term at the end of 2023, agreed with Netanyahu to make a decision about whether he will continue with another five-year term at the end of the Jewish High Holidays, which is around October 7. The agreement is in line with Yaron’s previous statements that he will announce his call about seeking another term close to the Jewish holidays.

Yaron, who took up the post as governor in 2018, has been critical of the advancement of the judicial overhaul in its current format and has warned about its economic costs. Back in July, the governor cautioned that the advancement of the legal changes has led to an increase in the level of uncertainty in the economy, reflected in the “excess depreciation” of the shekel and the underperformance of the Israeli stock market versus global markets.

Yaron’s stance has raised doubt in recent weeks among financial market participants if he would request that his tenure be extended and whether lawmakers would want to keep him in the job.

Among the potential candidates mentioned as possible successors to Yaron should he not continue for a second term are Prof. Efraim Benmelech from the Kellogg School of Management at Illinois Northwestern University; Uri Hefetz, economics professor at the Hebrew University of Jerusalem; and Prof. Michel Strawczynski, also an economics professor at the Hebrew University of Jerusalem, and formerly head of the Bank of Israel Research Department.

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At Sunday’s meeting, as the two discussed economic issues, Yaron emphasized the importance of forging a broad agreement between the coalition and the opposition on the proposed legal changes in order to restore stability and certainty and preserve Israel’s strong economy.

Prime Minister Benjamin Netanyahu (R) and Justice Minister Yariv Levin (L) at a cabinet meeting at the Prime Minister’s Office in Jerusalem on September 10, 2023 (Chaim Goldberg/Flash90)

Last week Netanyahu reportedly met with a delegation from Moody’s Investors Service ahead of the rating agency’s update on Israel’s sovereign country rating, which is expected to be released in October. In July, Moody’s warned about “negative consequences” and “significant risk” for Israel’s economy and security situation following the passage of the first bill of the judicial overhaul.

Earlier this year, the agency lowered Israel’s credit outlook from “positive” to “stable,” citing a “deterioration of Israel’s governance” and upheaval over the government’s bid to dramatically overhaul the judiciary by siphoning off some of its powers.