The International Monetary Fund (IMF) is predicting a growth of 4-5% in the Israeli economy for the year 2002. According to the Dow Jones Newswires agency, this is the greatest growth ever predicted for Israel by the IMF. Israel\'s Finance Ministry has been criticized by both economists and politicians for predicting an optimistic growth rate of 4%, which was to serve as the governing assumption behind the 2002 State budget, and Bank of Israel Governor David Klein recently urged the government not to rush to adopt the forecast while planning its 2002 budget.
Yet the IMF, praising Israel’s “hard-won credibility,” has predicted a growth rate of up to 5%. It urges “continued prudent fiscal and monetary policies, while utilizing any room to moderate the downturn.” One aspect of fiscal discipline identified by the IMF was the government’s offsetting of increased defense spending with cuts in other governmental expenses. Reversing earlier criticism, the current IMF report endorsed the Bank of Israel’s gradual approach to monetary policy and predicted that 2001 inflation levels would not surpass the government\'s target range of 2.5%-3.5%. Overall, the IMF found the Israeli economy to reflect financial stability and a conservative fiscal policy.
Yet the IMF, praising Israel’s “hard-won credibility,” has predicted a growth rate of up to 5%. It urges “continued prudent fiscal and monetary policies, while utilizing any room to moderate the downturn.” One aspect of fiscal discipline identified by the IMF was the government’s offsetting of increased defense spending with cuts in other governmental expenses. Reversing earlier criticism, the current IMF report endorsed the Bank of Israel’s gradual approach to monetary policy and predicted that 2001 inflation levels would not surpass the government\'s target range of 2.5%-3.5%. Overall, the IMF found the Israeli economy to reflect financial stability and a conservative fiscal policy.