starting to flow from the tamar field. unemployment in israel has been in a continuing decline for a considerable number of years. the central bureau of statistics changed its measuring framework in 2012, which makes it difficult for us to compare this year ’ s data to previous years. therefore, we look at the data for the 25 – 64 age group, which is less affected by the change in methodology. in this group, we can see a continued decline. unemployment in israel is lower than in many other countries, including those that are very advanced. toward the end of this lecture, i will enumerate a number of challenges and problems that require handling in the long term, but the macroeconomic situation in israel is, in the final analysis, very good other than one aspect : the government budget. beginning in 2003 there was a decline in the government deficit until 2007, when the budget was balanced and the deficit was close to zero. this was the result of the courageous and steadfast program formulated by the finance minister at the time, binyamin netanyahu, with the support of the prime minister. in 2008, the global growth rate began to decline, and in 2009 we returned to a budget deficit similar to what we had in 2003. this was an expected result in light of the decline in economic growth. once the recovery began, it was expected that we would be able to restore the path that began in 2003, a path of decline in the deficit. there was a good beginning, but in 2011, it became more difficult, and in 2012 the deficit, which was planned to be 2 percent of gdp, reached 4. 2 percent. bis central bankers ’ speeches many people ask who is responsible for the deficit in 2012? the answer is that the responsibility lies mainly with growth, which was lower than expected. at the beginning of 2011, the finance ministry had a projection for tax receipts which, in retrospect, was too optimistic. at the bank of israel, we did not think that their projection was too optimistic at the beginning of 2011. we only understood this in retrospect. following the decline in the growth rate in 2012, the government spent more than what it had planned to spend, which was another factor in increasing the deficit. unemployment data show that the economy is very close to full employment. in this situation, tax receipts are relatively high. if the economy enters a recession, the deficit will begin at the 2012 level and will grow from there. the recession at

, 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.