Bank of Israel Governor David Klein projects economic mayhem should the Bank of Israel Law amendment, presented to the Knesset on Monday, pass.

"After the law for cutting the budget deficit has been emptied of all meaning, deficits are persistently widening to international records, government spending is soaring, government debts are swelling, the tax burden is increasing, long-term interest is climbing, Israeli and foreign economic investments are shrinking, the deficit in the balance of payments is once again burdening, unemployment is deepening, and the prevalence of poverty is widening," Klein remarked.

He said that the amendment will bring back inflation, and lead to regression from foreign currency liberalization. The amendment will make it necessary to raise short term lending rates, Klein said, adding that the amendment will destabilize financial markets and institutions.

The governor said that the stipulations in the amendment hollow the bank's commitment to maintaining price stability, opening the door to government decisions whose inevitable result will be a rise in inflation.