Israel's c. bank chief stresses institutional autonomy amid judicial overhaul plan

FILE PHOTO: Bank of Israel Governor Amir Yaron gestures while he speaks during his interview with Reuters in Jerusalem
FILE PHOTO: Bank of Israel Governor Amir Yaron in Jerusalem. June 16, 2020. REUTERS/Ronen Zvulun/

JERUSALEM, Feb 6 (Reuters) - Institutional independence was vital for Israel's sovereign credit rating, the country's central bank chief told lawmakers who have been pushing for judicial changes that could weaken the Supreme Court.

Governor Amir Yaron was replying to parliament's Finance Committee, which asked why he even has a position on the government's plan to rein in the Supreme Court, whose judges, it said, have encroached on political matters in recent years.

"As an economist, I would point out in this context that many studies have shown that strong and independent institutions are essential for a developed and thriving economy," Yaron replied to committee head Moshe Gafni's question.

"Accordingly, the credit rating agencies examine these areas too. It is, therefore, important to ensure they are kept as such in any process being advanced," he said.

If written into law, the proposed judicial changes would strengthen political control over appointments of judges, including the Supreme Court, while weakening that body's ability to overturn legislation or rule against the government.

S&P Global Ratings director Maxim Rybnikov has told Reuters the judicial shake-up could pressure Israel's sovereign credit rating and dozens of economists have urged Israeli Prime Minister Benjamin Netanyahu to scrap the plan.

However, Netanyahu has said the changes would restore balance to the three branches of government and boost business by cutting back unnecessary litigation.

Critics have said that it will politicise the judiciary and compromise its independence, harm minorities, foster corruption and hurt Israel's legal protection abroad and tens of thousands of Israelis have been protesting nationwide.

Yaron also spoke against a bill by Gafni to freeze interest rates on mortgages for families purchasing their first home, saying it would defeat its own purpose of lowering costs while hurting Israel's free market credentials.

The Bank of Israel has been raising rates sharply since April to battle inflation, resulting in a jump of monthly mortgage payments. Gafni said he was planning to bring the bill to the government's ministerial legislation committee on Sunday.

Additional reporting by Steve Scheer; Editing by Arun Koyyur

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