JERUSALEM: Israel's government needs to immediately address lowering the budget deficit or face a growing debt burden, the International Monetary Fund said on Wednesday.
It expects a deficit of 2.75 percent of gross domestic product in 2015 and urged the government bring it down to 2.25 percent next year.
"The fiscal deficit remains stubbornly high," the IMF said at the end of its week-long visit to Israel.
"Current levels leave few buffers to deal with shocks, such as housing price correction, renewed conflicts, or a sharp recession." The IMF also said that the Bank of Israel does not need to lower interest rates further since inflation is expected to return to a 1-3 percent annual target in 2016.
It also projected economic growth of 3.0 percent in 2015, in line with the central bank's forecast, but said labour productivity must rise or GDP will slow in the future.
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