Bank of Israel Governor Stanley Fischer spoke out Thursday against Prime Minister Binyamin Netanyahu’s plan to raise the budget deficit target to 3 percent of gross domestic product, warning that the move could have disastrous consequences.

Speaking at the Israel Democracy Institute’s annual Caesarea Forum at the Dead Sea, Fischer said the deficit was likely to reach 3.5-4% this year and pointed out that in 2009 it rose from 0% to 5% almost instantly due to unexpected tax revenue shortfalls. If such an event were to occur again, he warned, the deficit could reach 7-8%, “and we would not be able to deal with that.”

“The last time that happened we turned to our rich uncle for guarantees. Today that rich uncle is less friendly,” Fischer said, in apparent reference to the $9 billion in loan guarantees the US offered Israel following the economic downturn in 2003. “It is not healthy for a state that is proud of its sovereignty to turn to external actors every time there is a problem. I would prefer that we stand on our own two feet.”

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