In the fiscal area, there has been a continued decline in government expenditure as a percentage of GDP since the start of the program led by Prime Minister Sharon and Finance Minister Netanyahu that began in 2003. The rule that determined that expenditures shall not grow by more than 1 percent in real terms is to a large extent responsible for this trend.
Another factor is the defense budget, which reached 35 percent of GDP after the Yom Kippur War, was 20 percent of GDP prior to the stabilization plan, and has been in constant decline since then, other than during the Second Intifada.