(Joint press release by the Bank of Israel and Ministry of Finance)
IMF: Israel's economy remains strong with GDP growing 4.7 percent in 2011, led by robust private consumption and buoyant investment. However, the global downturn is slowing Israeli growth, with 2012 GDP growth expected at 2.8 percent. Nevertheless, Israel’s fundamentals are strong: inflation and inflation expectations are squarely within the 1-3 percent target range, unemployment is at historic lows, the net international investment position is a surplus, and public debt has fallen steadily to below 75 percent of GDP. These strengths are also underpinned by Israel's sound institutional frameworks, including fiscal rules and a new central bank law. Furthermore, following recent discoveries of natural gas fields, Israel may become a net energy exporter in coming years.
The International Monetary Fund annual report on Israel's economy was published today (2 April 2012), following its approval by the IMF Executive Board. This year an updated report on the stability of Israel's financial system is also included, essentially based on the FSAP (Financial Sector Assessment Program) investigation carried out by the special delegation that visited Israel in November 2011.
The FSAP is a process involving a comprehensive investigation of the stability of financial systems and the quality of the supervision and regulation of its activities. The previous study of Israel's financial system took place in 2001. Since then there have been many changes in the financial system and the international standards, which prompted the latest assessment.
The examination carried out in November 2011 encompassed all the bodies involved in the supervision and regulation of Israel's financial system, including the Bank of Israel, and in particular the Banking Supervision, the Financial Stability area, and the Payment and Settlement systems; the Ministry of Finance, focusing on the Capital Market, Insurance and Savings Division; the Securities Authority; and the Tel Aviv Stock Exchange. The examination was carried out on the basis of international standards and specific core principles regarding the activity of the various bodies, and involved the use of up-to-date tools that have been developed around the world as part of the lessons learned from the most recent financial crisis.