The report also noted, that expectations are for a lower level of the
record capital inflows in 2000. However, there is no expectation of a
worsening of the balance of payments, due to the large sums raised
last year, and that are only now being repatriated. As a result the
shekel will be revalued as a result of the repatriation of currency.
The shekel's strength will also be underpinned, the report suggests,
in response to productivity growth of the Israeli economy, which will
be led by the resumed buoyancy of the high-tech sector.
The report recommended to Israel's policy makers, to concentrate on
maintaining fiscal stability. One of the ways to achieve that goal is
to reduce interest rate levels from the current real rate of interest
of six percent.
Israelis acknowledges concern about the disparity among its
population in levels of income came under scrutiny of the IMF which
offered suggestions as how to alleviate the problem. The IMF report
recommends a rebalancing of spending, with an increasing emphasis on
growth enhancing investments in infrastructure, education and
training.
While recognizing the short term deceleration of the Israeli economy
from its heights in 2000, the report states that the long-term growth
prospect for the economy are bright, particularly after solutions are
found to the security problem.
"There are causes for optimism that the Israeli economy will emerge
from the current downturn with financial stability intact, and poised
for a resumption of rapid sustainable output growth" the report
concluded.
The International Monetary Fund established in 1946, serves as a
"global crisis banker". In time of fiscal or monetary crisis, the IMF
bolsters individual countries by providing the Fund's general
resources for short pwriods. It provides them with an opportunity to
correct maladjustments in their balance of payments, without
resorting to measures, destructive of national or international
prosperity. As part of the process in carrying out its aims, it
monitors the economies of its members, that now number 183. It also
supervises exchange stability, and orderly exchange arrangements.
Stanley Fisher, IMF's managing director was recently in Jerusalem,
and presented the IMF's report. Its content covers nearly all aspects
of Israel's economy. The report stated, that Israeli economy by the
end of Q3 2000 had experienced the "best three quarters in recent
memory" but this was followed by "a very sharp deceleration",
resulting from a global turnaround of the high-tech boom, on which a
good part of the growth had depended. It also noted the negative
impact of the security problem, which had particularly affected the
tourism, agricultural sectors.sectors.
It lowered its previous projection for the growth of Israel's economy
from 4.5% to a "more subdued level" of 1.5-2% for 2001.