the effects of the crisis. 2. the bank supervision department is intensifying and extending its regular monitoring of developments in the banking system, with regard to both the robustness of the system and the role of the banks as a major source of credit. from the beginning of 2008 to the end of october bank credit to the public increased by 9. 4 percent, i. e., at an annual rate of 12. 5 percent. in the months august – october the rate accelerated to an annual 15 percent. 3. in addition, the bank announced that it was ready to help the banks with all the means at its disposal, as necessary, in order to support depositors. 4. the bank's program to buy foreign currency will continue until the forex reserves reach the level considered appropriate under the current circumstances – between $ 40 billion and $ 44 billion. these measures are wanting, however, and we must act determinedly in the following areas too : 1. a cautious but in a certain sense expansionary fiscal policy should be pursued. thus in 2009, assuming a growth rate of 1. 5 percent, the budget deficit is expected to reach about 3 percent of gdp, based on the automatic stabilizers, i. e., the expected drop in tax revenues resulting from the slowdown in growth, on the one hand, and a certain rise in government expenditure arising, for example, from an increase in unemployment, on the other. it would not be advisable to allow the deficit to rise much beyond that, because our ability to embark on an expansionary fiscal policy is very limited – our debt / gdp ratio is high, and the interest that the government would have to pay would rise significantly if its increased its borrowing. nevertheless, the tax cuts planned for 2009 should proceed, in a manner consistent with the automatic stabilizers. 2. the measures formulated by the ministry of finance and the securities authority, in cooperation with the bank of israel, should be implemented without delay. this program should help the economy to weather the storm. on the real side this includes increasing the rate of investment in the infrastructure, increasing credit to small and medium businesses, investing in r & d, and dealing with the labor market. on the financial side this includes provision of state guarantees for borrowing by the banking system to increase credit, the establishment of investment funds jointly with financial institutions to turn over nonbank credit, the establishment of credit officers to improve the credit turnover arrangement between bondholders and bond issuers

, and tax incentives on investment in israel. 3. i would to stress the measures already approved directed at dealing with the financial side – steps intended to increase the sources of bank and nonbank credit for the business sector, including small and medium - sized businesses, and steps to stimulate foreign investment in israel's capital market. on sunday 14 december the government made a decision to support the proposal put forward by the joint work teams of the ministry of finance, the bank of israel and the prime minister's office, regarding a " safety net " for savers close to retirement age. the bank is in favor of the proposal and its immediate implementation. however, despite the measures approved to handle the expected economic slowdown, we must make even greater efforts to deal with the crisis. unfortunately, it took us, the state of israel, about three months from the sharp deterioration in the global financial crisis, when lehman brothers collapsed, to formulate the actions to be taken and their approval by the government and the knesset. and they have still not been implemented. thus, valuable time that could have been used to the benefit of the economy has been wasted. it is of particular importance to proceed with the implementation of the steps on the financial side. i hope there will be no further delays and that we can start making progress. this is essential to avoid eroding the economic achievements of the last few years and to enable us successfully to meet the challenges facing us. hence, following the approval of the ministry of finance program last monday ( 15 december ), we must immediately enter the implementation stage. the financial crisis is here, and is not waiting for us. particularly at this time, in the approach to the elections to the knesset, we must deal with the challenges now confronting us in accordance with the guidelines we have followed hitherto – a credible macroeconomic policy, effective cooperation, focusing on the target, and determination. this we must do, to ensure that israel's economy comes through the current crisis in a good condition.