deficit and expenditure for 2002 may take the following directions : · the definition of the budget deficit should also be presented according to the definition used in the rest of the world, making it possible during the discussion to present data that are comparable with those available elsewhere. after the changes that have been made to date, there is only one outstanding difference in the definition : in the rest of the world it is customary to include all the government ’ s interest rate costs on the expenditure side, while we include only real interest. this definition, which is unique to israel and serves to make our budget deficit smaller, has misled many people in the past, and sent out a reassuring message about the size of our budget deficit. furthermore, even when the deficit is presented in accordance with our definition, over time it must be given in consistent terms, and preferably in accordance with the most recent definition. thus, for example, the reduction of the deficit from 1999 to 2000 was not from 2. 5 percent of gdp to 0. 5 percent of gdp, but from 3. 5 percent - a rate which is equivalent to the definition according to which the budget is calculated at 0. 5 percent for 2000. · what is needed is a blueprint for the deficit and government expenditure for the next ten years. the purpose of this would be to make it possible to fix the national debt at 60 percent of gdp, and reduce the consequent debt servicing burden. the government ’ s long - term plan for reducing the tax burden would also derive from this draft. the discussion of the national debt and its developoment, as well as of its repercussions on the tax burden, on the one hand, and the need to release significant budget sources for servicing the past deficit rather than solving the problems of the future, on the other, would shed additional light on the proposals to further increase the deficit for these and other purposes. · it is important to deal with the matter of private members ’ bills since they generally increase government expenditure or reduce its revenues. the attempt to make the discussion of these bills contingent on alternative financing has failed miserably. these proposals upset the conduct of fiscal policy and arbitrarily alter the priorities set by the government and ratified by the knesset. dealing with this issue does not mean dismissing, or even restricting, the possibility of tabling private members ’ bills. it must, however, evaluate these proposals in the context of national priorities as a precondition for approving them

this is that the export industries, which tend to be an engine of innovation and productivity, are not contributing their part in pushing productivity forward, and the low level of investment contributes less to increased production capacity and to increased productivity derived from the adoption of technologies inherent in new capital. the strategy that will support more balanced growth, which for its part will contribute to stronger and more prolonged growth, must therefore include the following components : - improved human capital and workers ’ skills — providing content and abilities that will enable successful integration in the labor market for all parts of the population, including broad technological education at various levels ; - improved business activity environment and removal of barriers that hinder competition from abroad - investment in infrastructure — such investment will make a particularly large contribution in israel in view of the low level of infrastructure, particularly that of public transit. the good state of the economy, in part thanks to the rapid increase in private consumption, actually requires us now to focus on dealing with the challenges so that we can ensure continued improvement in the standard of living in the long term. 4 / 4 bis central bankers'speeches