Subscribe to Print Edition | Mon., March 31, 2008 Adar2 25, 5768 | | Israel Time: 02:27 (EST+7) web haaretz.com   Back to Homepage Rosner's Domain Diplomacy Defense Jewish World Opinion National Print Edition Advertising Books Arts & Leisure Business Real Estate Easy Start Travel Week's End Anglo File

Bank of Israel: Cabinet's multi-year plan endangers the economy By Moti Bassok The 2007 cabinet decision to promote a multi-year plan for welfare, infrastructure, defense and social spending is likely to expose the economy to financial dangers, to stop Israel economic and fiscal measures from reaching the norms of developed nations and will increase the interest payment burden in coming years. These are some of the conclusions of the Bank of Israel's 2007 annual report, which will be released on Tuesday. According to the report, the multi-year budget plan contradicts the 2005 law limiting annual increases in government expenditures to only 1.7%. If the multiyear plan takes effect, government spending will have to rise an average of 4% a year from 2009 to 2012. Non-defense spending will rise 4.6% per year, and the 2009 budget deficit will be over 2% of GDP - and increase in following years. Advertisement Other implications are a rise in public spending compared to private expenditure, though the debt to GDP ratio will still drop, but after 2012 the debt ratio will again rise if the treasury's proposed tax reduction framework is implemented. In order to increase defense, infrastructure and social spending all at the same time by 4%, the state will have to make massive cuts elsewhere to stay within the budgetary framework - or if not, it will then have to raise spending above the legal ceiling and increase the deficit. The central bank said it was important for the cabinet to explain as soon as possible how it intends to reconcile this contradiction, and restore faith in its ability to meet its fiscal targets. If the state keeps to the 1.7% annual increase limit in spending, the debt to GDP ratio will drop from 80% in 2007 to 68% in 2012, and to under 60% in 2015. Israel would then meet the EU's debt targets. However, the central bank says that keeping to this limit would not allow non-defense spending to match the rate of population growth through 2012. Bookmark to del.icio.us   My land, my country Israeli Arabs mark 32nd Land Day in demonstrations across the country. One voice on Israel It's hard to find differences in U.S. candidates' promises on peace process.

Today Online 'PM passed 20 messages to Assad, but he disappointed us' Responses: 76 Bush: Peace deal by 2009 likely if road map fulfilled Responses: 158 Dutch Jewish group: Anti-Islam film is 'counterproductive' Responses: 171 Editorial: Israel must help Bush, Rice's belated peace effort succeed Responses: 42 More Headlines 00:00 Bush 'optimistic' on 2009 Mideast peace deal 22:17 Israeli Arab leader on Land Day: We'll fight Israel's 'rising fascism' 00:01 Study: 60% of Israel's poor are ultra-Orthodox and Arabs 21:55 Vatican: Islam surpasses Roman Catholicism as world's largest religion 23:56 Barak to bereaved parents: Labor to quit gov't sooner than anticipated 22:33 Genealogy Web site attempts to map out entire Jewish people 01:29 Police: Bnei Brak has by far the highest rate of sexual offenses 20:16 Netanyahu: No substitute for Israeli control in West Bank 22:54 On Israel, Clinton, Obama and McCain all aim to be like Bush 21:42 Gaza protesters demand that Egypt release Hamas militants 21:20 CIA chief: Al-Qaida recruiting 'Western'-looking fighters 00:39 Motor racing body mum as president accused in Nazi role-playing sex scandal 23:17 Dutch Jewish group: Anti-Islam film is 'counterproductive' Previous Editions Select Day 30 mar 28 mar 27 mar 26 mar 25 mar 24 mar 23 mar 21 mar 20 mar 19 mar 18 mar 17 mar

Special Offers Advertisement Learn Hebrew online with Israel's best teachers Sign up for a trial lesson today NEW! Dan Boutique Jerusalem Hotel Hip Dan Hotel in Jerusalem. Attractive Introductory Rates Pardes Institute Summer Sessions Study Jewish texts and issues in Jerusalem, Co-ed, All Levels FAREWELL ISRAEL New Film The Coming War for Islamic Revival - View Movie Trailer Free the Palestinians from: Corrupt Kleptocracy, Tyrannical Theocracy, Abysmal Anarchy Long-term Israel programs MASA is your gateway. More programs. More grants. 7589 rockets fired so far HELP US TO HELP THEM Fattal Hotel Chain Perfectly located hotels on best resorts of Israel. ISRAEL BONDS Build Israel Israel bonds - a multi-purpose way to celebrate Israel's 60th Eldan Rent a Car Israel's leading car rental company offers you a 20% discount on all online reservations Junkyard Junk a car - get free towing nationwide and a tax-deductible receipt

Home | TV | Print Edition | Diplomacy | Opinion | Arts & Leisure | Sports | Jewish World | Underground | Site rules |

Haaretz.com, the online edition of Haaretz Newspaper in Israel, offers real-time breaking news, opinions and analysis from Israel and the Middle East. Haaretz.com provides extensive and in-depth coverage of Israel, the Jewish World and the Middle East, including defense, diplomacy, the Arab-Israeli conflict, the peace process, Israeli politics, Jerusalem affairs, international relations, Iran, Iraq, Syria, Lebanon, the Palestinian Authority, the West Bank and the Gaza Strip, the Israeli business world and Jewish life in Israel and the Diaspora.

© Copyright  Haaretz. All rights reserved