global crisis in 80 years, and as everyone knows, we came through it relatively well. the most recent data confirm the strength of the recovery taking place in our economy. this success is based on two factors : a sound economic policy framework ; and a vibrant and innovative private sector. the economic framework combines the basic approach of integration into the world economy – in light of the fact that a small open economy like ours has no chance of succeeding on its own – with an understanding of the need to maintain a sound macroeconomic framework, through fiscal discipline and a monetary policy dedicated primarily to maintaining price stability and thus the purchasing power of the shekel. with regard to fiscal discipline, i want to pay tribute to the minister of finance and to his predecessors, as well as to the professional staff of the treasury, who can be relied on to fight for sound budgets, and whose efforts have been essential to the successful development of the economy. the private sector has been the engine of growth of the economy for the last quarter century, and the success of israeli innovation and enterprise is the envy of many countries. the private sector does not need much from the government in order to succeed – primarily it needs a clear and predictable market - oriented economic framework in which to operate, and a set of incentives that encourages the entrepreneurs and the professionals who are essential to our success to work and invest in israel. there has been a great deal of attention in recent weeks to the very high incomes that are earned in parts of the private sector. some incomes in some sectors, including the banking industry, do seem to be too high, but we need to be very careful in dealing with the problem, for we can all too easily exaggerate and cause severe damage to the israeli economy. the supervisor of banks has sent instructions to the banks on salaries, and is closely monitoring their implementation and the need for additional measures to deal with the pay of senior management. with regard to other public companies, we must find a way of strengthening the supervision of managers ’ salaries by boards of directors. our economic success is the basis for our possible acceptance later this year into the oecd, the organization of the most advanced economic countries. these achievements are essential not only to the economic wellbeing of israelis, but also to the existence of the state of israel, the jewish state, our hope of two thousand years. over the longer term, we need to be economically successful no less than we need to be able to defend ourselves militarily.

in this area are extremely worrying. we do not have one educational system, we have many. there is no core curriculum that ensures that every student learns the basic skills that are needed to compete in the ever - changing global economy. our results in the oecd ’ s pisa ( programme for international student assessment ) tests are woeful, and we are falling in the international rankings. we cannot build the nation and our future if we do not educate our people – all our people – to equip them to live in the modern world. at some point, the sooner the better, we have to confront the separate educational systems and their political context, and stop and reverse the deterioration of our educational standards. we are all concerned about the growing social gaps in our society. naturally we think of the gaps between the very top salaries and those at the bottom of the salary scale. those trends too are worrying, and they are not easy to deal with, though improving the educational system will surely contribute to creating a more just society. but in thinking about social gaps, we need to recognize that the biggest gaps are between different groups in our society – among the arab sector and the haredi sector in which poverty is concentrated – and the remainder of our society. so we need also to focus our attention on increasing the educational achievements and the labor force participation of those groups – and this is an even more difficult, but no less essential, task. the notable successes of the israeli economy and israeli science, signified by the nobel prizes awarded to israeli scientists this decade, are based on the educational system of israel of thirty to forty years ago. we need to restore the quality of both the school system and the system of higher education if we are to maintain the qualitative edge on the basis of which the israeli economy has thrived and on which israel ’ s future depends. in this context we have recently seen the first signs of positive reform in the educational system, and we hope this will continue and yield the desired results. improving the educational system will require both reforms and financing. the government has recently passed a new fiscal rule to determine the growth rate of government spending, accompanied by a declining path for the budget deficit and the government debt to gdp ratio. the government has also announced its intention of continuing to cut marginal tax rates, with the goal of encouraging growth. provided the economy can return to growth at about 5 percent – which looks somewhat ambitious at present – both the deficit and the tax rate cutting