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Tshuva: Gas exports will bolster Israel's global status
The report stated, however, that the Israeli economy is stable due to a high rate of foreign investments, strong regulation, a low unemployment rate and a shrinking external debt. The report predicted that Israel could become an important gas exporter in the coming years, in the wake of recent gas discoveries.
Real-estate bubble might still burst
IMF officials noted that the Israeli market is stable, but recommended top financial officials to take a number of steps to further strengthen the economy and prevent crises.
The steps include the establishment of a non-governmental committee to control fiscal policy. The committee will discuss the deficit target, the expenditure ceiling and the state of Israel's external debt, and recommend ways to adapt them to changing circumstances. According to the IMF, the deficit in 2012 will total in 3.4%, while the deficit target is 1%-3%. The issue of the growing deficit was also discussed in the latest Bank of Israel report.
The report also recommended to establish an agency to coordinate Israel's regulatory authorities (Bank of Israel, Israel Securities Authority, Israel Antitrust Authority, and the department of capital market regulation) which will maintain the stability of the market and balance between the demands of regulatory agencies.
The recommendation was made in light of the global market's instability, the centralized nature of the Israeli market, and fear that the real-estate bubble will burst.
The IMF report is based on a November 2011 study encompassing all the relevant elements in market regulation. The study was conducted according to international standards, using tools developed in the aftermath of the recent financial crisis.
Steinitz praises government
Finance Minister Yuval Steinitz responded to the IMF report, saying that the report is a badge of honor to the Israeli market, and the government's economic policy in a time of crisis. "We are pleased that the report recognized the firm preservation of budgetary discipline within the framework of a biennial budget as a way to safeguard the Israeli economy," said Steinitz.
According to Steinitz, the report's recommendation to maintain economic and budgetary discipline during 2012, and in the 2013-14 budget, and to continue lowering the debt-product ratio, should be a reminder to Israel's challenges and a warning against irresponsible and populist laws and decisions.