IMF warns of risks to Israeli economy posed by judicial reform, external factors

Jerusalem, May 11 An initial annual report, issued by the International Monetary Fund (IMF), has warned of risks to the growth of the Israeli economy due to the government's judicial reform and external factors.

An IMF delegation visiting Israel submitted the report to the country's Finance Minister Bezalel Smotrich and the Governor of the Bank of Israel Amir Yaron on Wednesday, Xinhua news agency reported.

The report, which analyses the Israeli economy in 2022 and includes forecasts and recommendations, stated that continued uncertainty around the judicial reform presents a notable downside risk to growth.

It noted that economic activity and inflation could both be negatively affected by a renewed surge in global energy prices, new supply chain disruptions, or an increase in geopolitical tensions.

It said that Israel's economic performance in 2022 was remarkable with growth reaching 6.5 percent, which was pushed by a vibrant hi-tech sector, and with unemployment at a record low.

The report added that public debt-to-GDP fell rapidly to pre-pandemic levels, international reserves are ample, the external position is strong, and the banking sector has adequate capital and liquidity buffers.

Furthermore, it noted that to enhance potential growth, Israeli authorities must prioritize education reform and infrastructure investment.