Israel's national deficit could grow to 3.5% of the country's GDP, an amount in excess of 50 million shekels ($13.9 billion), in 2019, the International Monetary Fund is warning.
The IMF warning comes despite the government's target deficit standing at 2.9% of the GDP, or some 40 billion shekels ($11 billion). If the IMF's forecast comes to pass, it would mean that Israel will exceed its target deficit by a sum of 10 billion shekels ($2.8 billion).
The IMF is recommending that by 2020, the new government adopt a target deficit rate of 2.5% of the GDP, which would require the government and the Treasury to slash the 2020 state budget and increase tax revenue by some 20 billion shekels ($5.5 billion).
On Friday night, the IMF unexpectedly published a summary of an IMF delegation visit to Israel from May 19-23. According to the IMF report, the fund's economists are calling Israel's increasing deficit "worrying."
The IMF economists wrote that Israel's deficit was on the rise despite a very low rate of unemployment. Even if the government makes great efforts to control expenditure, the deficit is expected to grow to 3.5% of the GDP in 2019, or possibly even more, the IMF report said.
Unless the Israeli government checks reins in spending and decreases the deficit, the country's debt-to-GDP ratio would grow for the third straight year, which would affect Israel's international credit rating, which last August reached AA-, the highest on record, the IMF warned.
