long - term budget targets and will demonstrate that the deviation in 2007 was an exception. c. structural changes i ) in the financial sector - with the aim of broadening the range of financial instruments and players ; ii ) incentives for growth - for example, to pursue a path of relatively low taxation ; iii ) flexibility and efficiency in the public system - with the aim of encouraging economic activity in various fields. in this context i would like to draw attention to the doing business report ( 2007 ) of the world bank, which was published a few months ago. the report ranks countries according to the ease of doing business there, that is according to bureaucratic and regulatory processes that one must overcome in order to run a business. each country receives a score of between 1 and 175, with 1 marking the best. overall, israel was placed 26th, which is not bad. but if we look at the individual components we see that we were good at " investor protection " ( 5th place ), " getting credit " ( 7th place ), " international trading " ( 13th place ), " starting a business " ( 15th place ), and " closing a business " ( 36th place ) ; we were middling in " paying taxes " ( ranked 62nd ) and " employing workers " ( 82nd ) ; and we were particularly bad in terms of " dealing with licenses " ( 101st place ), " enforcing contracts " ( 110th place ) and in " registering property " ( 150th place ). so we have much to improve on in many fields and it is important that we do this to create a better business environment. i said last week that the way rumors and misinformation on suspicions and investigations on this and that which are reported as fact harm the business environment, and maybe in this area too we should show more responsibility - and it also impacts very negatively on our political situation. and now to the last topic, which is by no means less important : d. education the need for reform in education is striking and so important, inter alia, in treating the problem of poverty in the long run, that i would like to expound on it here. education is a basic tool in every society for giving the young generation the tools to integrate into the labor market, to succeed on a personal level both economically and socially, and to contribute to the prosperity of the economy and society as a whole. on this subject our position is excellent in international comparisons. the rates of those with tertiary

stanley fischer : issues pertaining to the israeli economy address by professor stanley fischer, governor of the bank of israel, to the sderot conference for society, sderot, 7 november 2006. * * * first of all i would like to stress that society and economy are two sides of the same coin. particularly in israel, because of its uniqueness, it is impossible to waive the good of society for the good of the economy, but it is equally clear that it is impossible to forego the good of the economy for the sake of society. one complements the other. as in economic policies, so too in social policies one must distinguish between short - term and longterm tools. so it is important to use tools that in the short term will help improve the welfare system for the weaker members of society who cannot join the labor force. however we must not forget that the most important thing for society - and for the economy, for the state, and for its security too - is the long term, and what stands at its center, in the long run, is sustainable growth. so a sensible policy should strike the right balance between short - term and long - term tools, as they can be substituted one for the other. before i get into these topics, i will begin with an overview of the state of the economy. a. state of the economy the israeli economy is today in a very good state, even after the war. the economy has enjoyed rapid growth now for three years, and the bank of israel forecasts that gdp will grow this year by 4. 6 percent. this is a rapid rate of growth by international standards, and israel is also enjoying an increase in investments and exports, a balance of payments surplus, a particularly high rate of foreign investments, rising productivity and an improvement in employment data. inflation in israel is low, levels of interest rate are similar to elsewhere and the markets demonstrate strength and stability. and what led to this extremely good state of the economy? a combination of three factors : the first : the structural changes in the economy during the past 15 years - the liberalization of the foreign exchange market, making it more flexible, privatization, the development of the capital market, opening it up to competition from abroad etc ; the second : the responsible macroeconomic policies of the ministry of finance and the bank of israel ; and the third : the background factors which are not always dependent on us. i am referring here to world economic developments and the security