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In its annual report, the IMF largely praised Israel's policies and recommended the Bank of Israel not raise interest rates until inflation -- at an annual rate of 0.1 percent in January -- moves closer to at least 1 percent.
The IMF, which forecast stable Israeli economic growth of about 3.5 percent in the coming years, said the government's budget deficit target of 2.9 percent of gross domestic product was too high and limits the ability to reduce debt.
It noted that Israel faces sizable infrastructure needs, with traffic congestion the worst in the OECD.