Prime Minister Binyamin Netanyahu overruled Finance Ministry demands Tuesday, deciding to double next year’s budget deficit ceiling to 3 percent of gross domestic product instead of implementing new tax hikes.

The government initially set the 2013 deficit target at 1.5% when it published multi-year projections two years ago. Senior Treasury officials had reportedly been pushing for an increase to 2.5% accompanied by tax hikes, but the prime minister announced the deficit would rise to 3% - or almost NIS 30 billion. Netanyahu and Finance Minister Yuval Steinitz also agreed to set new long-term deficit targets – lowering it to 2% by 2016 and 1.5% by 2019 – and to maintain their original goal of lowering debt-to-GDP ratio to around 60% by 2020.

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