Joint Ministry of Finance and Bank of Israel Press Release

Joint Ministry of Finance and Bank of Israel Press Release
Initial report of IMF mission on Israel's economy
The Minister of Finance: "Despite the complicated challenges we confronted in 2009, we must remember that we will face many more in 2010, among them the challenge to decrease unemployment rates."
The Governor of the Bank of Israel: "The report states that Israel's handling of the crisis serves as evidence of the relatively strong situation of the economy compared with that of other economies."
The IMF submitted today the Concluding Statement of the 2009 Article IV Mission to Israel to the Minister of Finance, Dr. Yuval Steinitz, and to the Governor of the Bank of Israel, Professor Stanley Fischer.
The mission, consisting of four economists with Peter Doyle, Division Chief in the European Department in the IMF, as mission chief, came to Israel to carry out the annual Article IV Mission.
The Governor of the Bank of Israel, Professor Stanley Fischer, said: "I thank the IMF mission for its thorough investigation of Israel's economy. As always, the report is the result of the professional work carried out by the members of the mission, who examined the policy measures adopted by the government and the Bank of Israel against the background of the global crisis. We are pleased that the mission expresses support of the monetary policy of the Bank of Israel, including the Bank's activity in the foreign currency market so far, since the outbreak of the crisis."
However, the report published today suggests other steps to improve the situation further. Among the proposals put forward by the mission, the Governor emphasized those related to maintaining the credibility of monetary policy, which will be helped by the enactment of the new Bank of Israel Law; maintaining the coherence of all the components of fiscal policy; the need to return the debt/GDP ratio to a decreasing path; and the need to intensify the supervision and monitoring of all the components of the financial system.
The Governor added "We must not become complacent as a result of the positive report on the economy. The decline of the rate of potential growth to between 3 percent and 3.5 percent as set forth in the report is an indication of the economy's weakness." In the light of that weakness, the Governor stressed the urgent need for structural changes in the economy, that will help return it to the path of high potential growth as in past years.
Minister of Finance, Dr. Yuval Steinitz, thanked the IMF mission members and said: "The report reflects Israel's handling of the crisis, and emphasizes the importance of the bi-annual budget and the stability of the financial sector. As the IMF economists mention, the resilience of the Israeli economy is mainly a result of the decrease in public debt, and of the structural reforms of the last decade. According to the report, Israel was among the first countries to begin the recovery, and as a result the decrease in growth in Israel was among the mildest globally". Steinitz added: "The government will continue to manage a careful and responsible exit strategy from the crisis, and will support growth and reduction of debt. We intend to prove, in practice, that Israel's growth potential was, and remains, high."
The IMF Executive Board is expected to discuss the mission's full report in February 2010, and once approved, it will be available to the public.
Today's meeting with the mission was attended by members of the management of the Ministry of Finance and the Bank of Israel.
For the mission's initial report - Click here