meetings with other central bank governors, we discuss the economic situation. in the last meeting, two days ago, they started speaking of optimistic signs. we are currently following an expansionary monetary policy, but we must be ready to change direction if and when necessary, but not before. the markets and the bank of israel expect the april cpi to rise by about one percent. nevertheless, nearly all forecasters expect inflation in 2009 to be below 2 percent, and we do not intend to react to one month's index, especially if it affected by seasonality. the governor of the bank has the role of economic adviser to the government. the budget deficit is expected to be six - and - a - half percent of gdp this year, and five percent next year. growth this year is expected to be a negative one - and - a - half percent, with a rise in the debt / gdp ratio. this is not an advisable direction for the economy to follow. what is of concern is that the debt / gdp ratio at the end of the decade may be back where it was at its beginning. in order to prevent the deficit reaching above 6. 5 percent this year and 5 percent next year, expenditure must be reduced. there are several ways of achieving that, e. g., cutting public sector wages and / or postponing reductions in tax rates. with regard to the current deficit, i suggest starting with the 6. 5 percent of gdp deficit this year and 5 percent next year, to make it very clear that the path is a downward one. 2. the second of this year's objectives is the new bank of israel law. the current prime minister and the minister of finance when i took up office expressed support on this issue, and that was one of my conditions on accepting the position. why is the new law so important? there are several reasons : the new law will formalize the independence of the bank ; it will specify the bank's obligation regarding transparency ; there will be a monetary committee that will make interest rate decisions together with the governor ; and there will be an administrative council that will approve administrative decisions. why is a decision by committee preferable to a decision by an individual? research has shown that on average, decisions made by a committee are better than those of a single decision maker. the current bank of israel law is 55 years old. 3. the third task relates to the integration of israel's economy into the global economy. progress has

also deviations relating to the medium - term budgetary targets, disciplinary procedures will follow reverse qualified majority rule, and the debt criterion will play a more active role. the “ fiscal compact ” strengthens this focus on prevention through a new “ first line of defence ” : the introduction of balanced budget rules in the constitutions of member states. these rules have the merit of shifting to the national level the main responsibility for compliance, rather than calling it to account in brussels. in fact, if the rule is applied strictly, the “ fiscal compact ” will correct imbalances before the european union procedures even need to be activated. another lesson from the experience of the last decade is that the soundness of public finances is not the only relevant factor to be monitored. macroeconomic imbalances and competitiveness losses may also lead to severe disturbances with systemic consequences. bis central bankers ’ speeches the new “ macroeconomic imbalances procedure ” ( mip ) allows early monitoring of variables such as competitiveness trends, private credit flows, house prices, the real effective exchange rate or unit labour costs. if the procedure identifies the existence of imbalances, a system of alerts, recommendations and, if necessary, penalties can be triggered. under the mip, which is designed in parallel and complements the stability and growth pact, the “ exuberance ” of credit and the cumulative losses of competitiveness that we observed during the first decade of the euro would have flashed “ red lights ” much earlier. this procedure has been criticised by some as being asymmetric in relation to the so - called “ super - competitive countries ”. admittedly, the vulnerabilities created by excessively large current account deficits are greater than those associated with surpluses, and therefore require more urgent remedies. nonetheless, structural factors underlying high and sustained current account surpluses are also partly addressed in the procedure, although not to the same extent as in the case of the countries in deficit. for example, parallel to the mip, the commission intends to conduct further analyses on the determinants and possible implications for economic policy arising from the existence of high and sustained current account surpluses including in this examination commercial and financial links between surplus countries and deficit countries. the commission should also examine alternative ways to rebalance the current account imbalances, in particular within the euro area, also taking into account the global context. in this regard, we must remember that a recurrent theme in the response to the