The International Monetary Fund stated on Wednesday that "the proposed judicial amendments in Israel represent a significant risk to the economy and could lead to tightening financial conditions and hinder investment, consumption, and long-term growth."
In a statement, it mentioned that "there needs to be a politically sustainable solution to mitigate the uncertainties surrounding the amendments, one that is clear and well-understood both domestically and internationally."
It added, "As in any country, maintaining the strength of the rule of law will be important for economic success."
The IMF praised Israel's policies and economic management in its review, noting that "its GDP growth is expected to slow to 2.5% in 2023 from a 'notable' growth of 6.5% in 2022. Public debt levels to GDP have returned to pre-COVID rates, its foreign exchange reserves are ample, and its banking sector has adequate capital and liquidity reserves. Meanwhile, Israel's monetary policy stance should remain tight in light of a strong labor market and inflation rates exceeding the central bank's target."
The right-wing coalition government has proposed comprehensive amendments that may limit the Supreme Court's authority to rule against members of the legislative and executive branches and grant ministers more powers in appointing judges.
In this context, Israeli Prime Minister Benjamin Netanyahu stated that "the amendments aim to achieve a better balance between the authorities," agreeing to "postpone the amendments in an attempt to negotiate a compromise."
The plan has sparked internal protests and raised concerns among Israel's Western allies about the potential weakening of the rule of law.
