The Bank of Israel today publishes its 2021 work plan and budget
The total
budget is approximately 7.5 percent lower than the budget for 2020.
Today, the Bank of Israel is publishing
the main provisions of its work plan and administrative activity budget for 2021.
The Bank of Israel’s Supervisory Council
discussed the Bank's annual work plan, approved the Bank's annual budget for
administrative activity, and submitted the budget to the Knesset Finance
Committee, as required by the Bank of Israel Law, 5770–2010.
The Bank of Israel has a critical role
in managing the economic crisis deriving from the COVID-19 pandemic, in
strengthening and supporting economic activity in Israel, and in promoting the
renewed growth of the economy. The Bank did this over the past year both
through various policy measures that it led and through providing economic
advice to the government on various issues. In the Bank’s activity in 2021, as
well, emphasis will be placed on the exit process from the crisis and on
encouraging growth and economic activity, as reflected in the Bank’s work plan
and budget.
Following are the targets set by the
Bank’s management for the Bank’s work in the coming years:
·
Adjusting monetary policy
to the changing environment
·
Strengthening the financial
system and the Israeli economy’s resilience to crises
·
Consistently advancing
research on the Israeli and global economies
·
Broadening the abilities to
collect and extract economic data and research, and making it accessible to
researchers and decision makers
·
Promoting financial
infrastructures and digital means of payment in Israel’s economy
·
Encouraging competition and
innovation in the financial system
·
Protecting customers’
rights, improving their negotiating position, and reducing information gaps
·
Increasing the
accessibility of financial services to all citizens (financial inclusion)
·
Tightening the Bank of
Israel’s connection with the public, in line with the various target population
groups
·
Enhancing the professional
dialogue with regulators in Israel, the Knesset, and government ministries
·
Enhancing the collaboration
with international institutions and with central banks
·
Managing the foreign
exchange reserves
·
Implementing the Citizens
of Israel Fund Law, 5774-2014
·
Aligning the Bank with the
changing environment, including the promotion of a culture of innovation and digital
work space
The Bank’s budget
The Bank of Israel's budget relates to the
Bank’s administrative activities necessary for performing its functions and
achieving its targets.
In accordance with the Bank of Israel
Law, the Bank of Israel's budget is divided into several areas of activity: 1) Management
and Central Services (the expenditure budgets of the entities that deal with
the management of the Bank and with the provision of services and support); 2) Performance
of the Bank’s functions (the expenditure budgets of the core departments); 3)
Representative office abroad (the representative office was closed in 2019, and
therefore this area has been cancelled beginning with the 2020 budget); 4)
Pensions; 5) Investments; 6) Income; 7) Reserve; 8) Currency issue; 9) Managing
the assets of the Citizens of Israel Fund for natural gas profits, and 10) the Credit
Data System.
The Bank of Israel’s overall budget for
2021 totals NIS 996 million. The budget is 7.5 percent smaller than in 2020,
primarily due to a decrease in currency issue and the Bank’s investments this
year.
Following are the main changes in the
Bank of Israel’s budget for 2021:
Currency issue: The budget for the
“Currency issue” activity area will be NIS 37 million, a decrease of 58 percent
relative to 2020. This budget is impacted by the demand for cash, existing
stocks, and issuance costs, and therefore it is not fixed over the years but
changes each year.
Investments: The budget for the “Investments” activity area
will be NIS 38 million, a reduction of 67 percent compared with 2020. It
decreased in light of the completion of several large projects in the past
year, and in view of the Bank’s decision not to advance new large projects in
2021 due to the economic crisis deriving from the COVID-19 pandemic.
Credit Data System: The budget
in the “Credit Data System” activity area includes the budget for a range of
activities required by the Credit Data Law, 5776-2016. The budget in this area will
be NIS 82 million, an increase of 9 percent compared with 2020. This increase
derives from the decrease in forecast income due to the coronavirus crisis, and
from continued investment in developing the system.
Management and Central Services, and
Performance of the Bank’s functions: The budget for these activity areas
will be NIS 525 million, an increase of 7 percent compared with 2020. This
increase derives mainly from wage creep, which is impacted by collective agreements
and additions to the workforce, and from growth in maintenance expenses due to
the new building that began being used in August 2020.
Budget for future years: The
budget for permitted commitments for coming years is NIS 252 million, of which 40
percent is designated for future commitments in respect of the operation of the
Credit Data System.
The administrative activities budget
does not include income and expenses stemming from the implementation of
monetary tools, the provision of credit to banking corporations and to other
financial institutions, activities related to managing liquidity in the
economy, foreign exchange reserves investments, etc. Such income and expenses
are reflected in the Bank of Israel's financial statements and in the
Investment of the Foreign Exchange Reserves report of the Bank.
Table 1:
The Bank of Israel’s Budget for 2021
(financial
data in NIS thousand)
|
2021
|
2020 budget
|
Actual
expenditure 2019
|
Budget
|
Permitted
commitments for coming years
|
Personnel
ceiling
|
Bank of
Israel
= = = = = =
=
|
996,421
= = = = =
|
252,041
= = = = =
|
891
= = = = =
|
1,077,344
= = = = =
|
1,122,980
= = = = =
|
01
|
Management
and Central Services
|
267,541
|
36,972
|
366
|
250,168
|
230,777
|
02
|
Performance
of Bank’s functions
|
257,110
|
19,560
|
471
|
242,296
|
225,031
|
03
|
Representative
office abroad
|
|
|
|
|
1,999
|
04
|
Pensions
|
303,249
|
124
|
|
296,972
|
272,922
|
05
|
Investments
|
37,960
|
36,311
|
|
115,706
|
184,753
|
06
|
Income
|
(6,574)
|
|
|
(6,634)
|
(6,942)
|
07
|
Reserve
|
17,170
|
15,500
|
10
|
15,205
|
|
08
|
Currency issue
|
36,878
|
42,836
|
|
88,567
|
74,128
|
09
|
Operation of
the Citizens of Israel Fund for natural gas profits
|
1,550
|
|
|
|
712
|
10
|
Credit data
system
|
81,537
|
100,738
|
44
|
75,064
|
139,601
|