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.