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IMF Tells Israel to Cut Government Spending

Despite Israel’s reputation for its success in weathering the global economic downturn, the International Monetary Fund has admonished Jerusalem to reduce government spending in order to contain inflation and reduce debt. IMF issued a report at the end of a two-week visit to the Jewish state, concluding that the “overall stance of policies [needs] to be tightened more quickly than planned.” Inflation pressures have been strong as a result of surging housing prices, a factor IMF urged Israel to control. Prime Minister Netanyahu said on Monday that his government will announce measures to cool housing prices. Exporters have been suffering as the shekel appreciated 15% against the dollar during 2010. On the question of the government’s stake in new gas finds, the IMF weighed-in on what has become a contentious domestic issue. It recommends the government raise its take on non-renewable resources and use the first proceeds to reduce the public debt.