LOGO

The Economy in Israel

Ministry of FinanceJune 2012

Outline of the Deficit2013-2020

2

Budget DeficitIsrael and selected countries, 2011-2012

3Source: IMF, Ministry of Finance.

GermanyIsraelFranceSpainGreeceUnited Kingdom

United States

Simulated Outline of Debt-to-Product RatioBased on the Deficit and Expenditure Outline

4

New outline – 3.5% average growth

New outline – 4.0% average growth

Year 2011 - Summary

Growth4.8%

Unemployment (based on the new index*)7.0%

Income from taxes (NIS billions)211.3

Deficit (percentage of product)3.3%

Debt (percentage of product)74.2%

5

* The recent amendment of the method of the workforce survey by the Central Bureau of Statistics resulted in an upward adjustment of unemployment rates.

Projection for 2012

6

Growth3.2%

Income from taxes (NIS billions)221

Deficit (percentage of product)3.4%

Debt (percentage of product)73.8%

Product Growth2008-2011

0.8%

4.8%

4.0%

4.8%

0%

2%

4%

6%

2008 2009 2010 2011

7Source: Central Bureau of Statistics.

Product Growth – Global Comparison2011-2012

Source: OECD, Central Bureau of Statistics.

8

Germ

any

China

Chile

Israe

l

Korea

Brazil

Austra

lia

United

State

sFra

nce

United

Kingdo

m Japa

n

Increase in Real Investments2008-2012

9

Between the years 2010-2011, the volume of investments grew by some 33%.

Source: OECD, Central Bureau of Statistics.* The projection for 2012 is based on OECD data.

Increase in Real Investments, Global Comparison2011

10

Germ

any

China

Chile

Israe

lKor

ea

Austra

liaUnit

ed

State

sFra

nce

United

Kingdo

mJa

pan

Source: OECD, Central Bureau of Statistics.China – based on IMF data.

Unemployment and Rate of Participation

The high growth rates recorded in the economy and the reduction in transfer payments since 2003 increased the rate of participation

11

Right axisRate of participation

Left axisUnemployment rate

Unemployment Rate2008-2012

12

United States Eurozone (12 countries) Israel

The data for 2012 are the existing available data, and in Israel are based on the new index.Source: BLS, CBS, EUROSTAT.

Creation of Jobs in IsraelIncrease in the Number of the Employed and of Available

Jobs, in Thousands

13

S&P Credit RatingIsrael and Western Europe, 2010-2012

CountryCurrent ratingChange in rating

AustriaAA+

ItalyBBB+

IrelandBBB+4X

BelgiumAA

United KingdomAAA=

GermanyAAA=

The NetherlandsAAA=

GreeceCC12X

IsraelA+

SpainBBB+

PortugalBB5X

FranceAA+

SwedenAAA=

14* An arrow represents the rise or decline of the rating by one level.

Real Rate of Product Growth 1970-2011

15* Includes an updated projection for 2012 at the rate of 3.2%.

16

Average growth

3.6%

* Updated projection.

Real Rate of Product Growth 2002-2012

Share of the Workforce* in the Population2009-2029

17

* Population of ages 15-65.Source: Demographic projections of CBS, analyses by Economics and Research Division.