JERUSALEM (Jun. 13)
The International Monetary Fund (IMF) has sharply criticized the Israel government’s economic policy and predicted massive deficits for Israel by 1985 if the present policy is continued.
The IMF, of which Israel is one of 150 member states, functions as a world bank, rendering assistance to foundering economies on condition that the recipient government imposes firm, often austere measures. Israel, as a member state, received the report on its economy which was classified as confidential. But Yediot Achronot published today what it said were the criticisms.
According to the newspaper, the IMF expressed doubt over the Treasury’s forecasts with respect to inflation and the balance of payments deficit. It recommended a speed-up in devaluation of the Shekel and a decrease in real wages.
The IMF said the slow rate of devaluation was the chief reason why Israel’s exports have slumped causing the balance of payments gap to widen. It predicted a $5.3 billion deficit for Israel this year and a $6.2 billion deficit in 1985. Israel’s total debt in the latter year will amount to $28.5 billion, far higher than the Treasury has predicted, the IMF said.