IMF Praises Israel’s Financial Response to Pandemic

Despite the jarring effect on Israel’s economy, including record unemployment rates, the International Monetary Fund (IMF) on Sunday praised the Bank of Israel’s handling of the crisis, Globes reported.

“The Israeli economy entered the COVID-19 pandemic from a position of strength, and the authorities mounted a large and rapid response to the crisis. Timely and decisive measures introduced by the Bank of Israel at the outset of the pandemic have helped preserve market and financial stability and access to credit. Fiscal support to the health system, households, and businesses has also helped soften the economic impact of the pandemic,” the IMF report said.

While the IMF analysts forecast that the Israeli economy would shrink by 5.9% in 2020, IMF economist Iva Petrova said that this forecast is currently under review, and that the shrinkage can be expected to be substantially less. Alongside this, Petrova also estimates that in the review the growth forecast for 2021 will also be reduced – at the last update it stood at 4.9%.

The ongoing failure to pass a state budget, which could yet lead to new elections, was also noted. “Prompt passage of a 2021 budget would help prioritize spending, position the economy for growth, and reduce economic uncertainty associated with the pandemic,” the report states.

The IMF found that the output of the Israeli economy suffered less than that of other developed countries in 2020, and foresees a rapid comeback in 2021, barring the unforeseen.

The report is the product of the IMF’s semi-annual visit in which its analysts met the minister of finance, the governor of the Bank of Israel, and senior figures in economy. A more comprehensive report on the Israeli economy is due to be published in a few weeks’ time.