Revised Forecasts, Smaller Deficit Ahead

December 2006 | Economic Analysis

BMI View: We remain sanguine about the official budget outlook, believing that the deficit will narrow gradually from 2% of GDP to 0.5% of GDP over the forecast period. However, we note that extra-budgetary spending on 'non-recurrent' events such as the Gaza withdrawal or the war with Hizbollah could threaten the government's capacity to service its debt.

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