May 24, 2019 / 1:27 PM / 4 months ago

Israel should cut budget deficit to 2.5% of GDP starting in 2020: IMF

The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., as IMF Managing Director Christine Lagarde meets with Argentine Treasury Minister Nicolas Dujovne September 4, 2018. REUTERS/Yuri Gripas

JERUSALEM (Reuters) - The International Monetary Fund said Israel should reduce its budget deficit significantly to 2.5% of gross domestic product starting in 2020, in its preliminary annual report on Friday.

Following a visit by IMF staff to Israel this week, the fund said that it expected Israel’s budget deficit to reach at least 3.5% this year, and that current policies implied further deficit increases in coming years.

“Leaving debt on a rising path will constrain Israel’s ability to use fiscal policy to cushion shocks to the economy,” the fund said in the report.

It noted that Israel’s healthy economy supported Israel taking steps in the 2020 budget, such as trimming the deficit through cutting tax benefits and raising revenues.

Reporting by Steven Scheer

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