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Netanyahu and Fischer
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Government sets deficit target at 3%

Despite Bank of Israel governor's opposition, government approves increasing deficit target

The government approved a proposal by Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz to increase the deficit target to 3% of Israel's Gross Domestic Product, in line with the economic slowdown and the increase in government spending.

 

During Sunday's cabinet meeting, Netanyahu explained that the purpose of the move wasn't to increase government spending but allow the government to operate despite lower revenues. "What we're not doing is changing the spending target, that's something the government controls and we will strictly adhere to.

 

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"As far as revenues go – it could go up or down. We are fixing the deficit target to fit with the Maastricht target which is the European standard. I believe that in Europe, Germany is the only country that stays below it."

 

The prime minister nevertheless noted that the move requires a line of adjustments but stressed he did not want to raise taxes.

 

"When you raise taxes you suppress growth, and when you suppress growth you raise unemployment and ultimately expand the deficit. That is why I believe this is the right balance. I believe this is the proportional thing to do."

 

Netanyahu noted that some taxes will have to be raised though.

 

The meeting was also attended by Bank of Israel Governor Stanley Fischer who fiercely criticized Netanyahu's decision. Responding to his criticism, the prime minister pledged to behave responsibly and not allow overspending.

 

Boaz Fyler contributed to this report

 

 


פרסום ראשון: 07.01.12, 15:55
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