The Bank of Israel today is publishing the main provisions of its work plan and administrative activity budget for 2020. The Bank of Israel’s Supervisory Council[1] 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.
In recent months, the Governor of the Bank of Israel has been promoting an intensive process to formulate a new strategic plan for the coming years. As part of this, the Bank’s long-term strategic targets are being reexamined, in view of the expected changes in the international economic environment and its impact on Israel’s economy. The strategic plan will be published when it is completed. The work plan for 2020 integrates some of the insights from the strategic plan.
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 will be cancelled beginning with the 2020 budget); 4) Pensions; 5) Investments; 6) Income; 7) Reserve; 8) Currency issue; 9) Operation of the Citizens of Israel Fund for natural gas profits, and 10) Credit data system.
The Bank of Israel’s overall budget for 2020 totals NIS 1,077 million. The budget is approximately 10 percent smaller than 2019, primarily due to the completion of several major projects.
Following are the main changes in the Bank of Israel’s budget for 2020:
Currency issue: The budget for the “Currency issue” activity area will be NIS 89 million, a decrease of 29 percent relative to 2019. This derives from the completion of the entry into circulation of the new series of banknotes, and a shift to ongoing issues of banknotes and coin into circulation.
Investments: The budget for the “Investments” activity area will be NIS 116 million, a reduction of 9 percent compared with 2019. It decreased primarily in light of the expected completion of two main projects that were approved in previous years—the renovation of the main building in Jerusalem, which is essentially completed and employees have moved back in, and the construction of a Technology and Emergency Center, which is expected to begin operation in the second half of 2020. Most of the main investments planned for 2020 are in the technology area.
Credit data: In April 2019, the credit data system went online, in accordance with the Credit Data Law, 5776-2016. The budget in the “Credit data system” activity area includes the budget for a range of activities required by the Law, and will be NIS 75 million in 2020.
Operational efficiency: The Bank promotes a consistent increase in efficiency in its ongoing activity, despite the increase of the areas of its responsibility, and the increase in the scope of the projects and reforms promoted by the Bank. This is expressed in the budget for 2020.
Budget for future years: The budget for permitted commitments for coming years is NIS 371 million, of which 31 percent is designated for future investment commitments by the Bank 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 2020
(financial data in NIS thousand)
|
|
2020 |
2019 budget |
Actual expenditure 2018 |
|||
|
Budget |
Permitted commitments for coming years |
Personnel ceiling |
||||
|
Bank of Israel
= = = = = = = |
1,077,344 = = = = = |
370,525 = = = = = |
880 = = = = = |
1,195,044 = = = = = |
1,149,277 = = = = = |
|
|
01 |
Management and Central Services |
250,168 |
34,301 |
361 |
226,989 |
224,634 |
|
02 |
Performance of Bank’s functions |
242,296 |
15,783 |
463 |
214,258 |
201,250 |
|
03 |
Representative office abroad |
|
|
|
2,202 |
3,839 |
|
04 |
Pensions |
296,972 |
124 |
|
285,887 |
289,708 |
|
05 |
Investments |
115,706 |
42,733 |
|
127,523 |
137,151 |
|
06 |
Income |
(6,634) |
|
|
(6,870) |
(6,873) |
|
07 |
Reserve |
15,205 |
97,237 |
16 |
49,842 |
|
|
08 |
Currency issue |
88,567 |
66,055 |
|
125,111 |
180,171 |
|
09 |
Operation of the Citizens of Israel Fund for natural gas profits |
|
|
|
4,248 |
1,002 |
|
10 |
Credit data system |
75,064 |
114,293 |
40 |
165,855 |
118,395 |
[1] The Supervisory Council, under the Bank of Israel Law, 5770-2010, is the entity charged with supervising the orderly and efficient management of the Bank of Israel and approving the annual budget for administrative activity, among its other responsibilities. The Supervisory Council consists mostly of members from among the public.
The Highlights of the Bank of Israel Work Plan for 2020