Finance Minister Yair Lapid was reportedly weighing raising Israel’s deficit target in order to avoid further budget cuts, a move that would put him at odds with Bank of Israel Governor Stanley Fischer’s recommendations.
Earlier in the month, Fischer warned that failure to curb the deficit would explode the country’s debt, pushing it as high as 95% of GDP by the end of the decade instead of easing it down from its 2012 level of 73% to a sustainable 60%. Israel, Fischer noted, pays a high risk premium on its debt, meaning that failure to reduce the debt will be very costly in the long-run.
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