Following forecasts that debt deepening will increase to around 80% in 2020, the Treasury's estimate has been updated downwards • In a global comparison, Israel is a leader in maintaining a budget balance in the last decade • The debt ratio in developed countries stands at 125%
Jerusalem Ministry of Finance // Photo: Oren Ben Hakon
The Ministry of Finance's optimistic forecast on the issue of the debt-to-GDP ratio of Israel: According to a preliminary estimate published yesterday by Accountant General Yahli Rotenberg, the public debt-to-GDP ratio will total 73.1% in 2020 - compared to last summer's 80%.
However, compared to 2019, which amounted to a debt ratio of 60%, this is a significant deterioration.
The increase in the debt-to-GDP ratio was due to an increase of nearly NIS 80 billion in government expenditures, along with a decrease of about NIS 30 billion in revenues.
The increase in debt is lower than expected, mainly due to the strengthening of the shekel against the dollar and the euro, inflation and low interest rates, and the relatively small impact on GDP, relative to forecasts.
After deducting local government debt, the government debt-to-GDP ratio stands at 71.6% compared to 58.5% in 2019. In both cases, these are the highest numbers since 2009 - the period of the global financial crisis - when the public-debt-to-GDP ratio was 74.6% and the government 73%. .
Israel's debt-to-GDP ratio is significantly lower than the average among developed countries, where the debt ratio is more than 125% and below the average in the eurozone - with a debt-to-GDP ratio of 101%.
It also turns out that Israel is among the leading countries in the developed world in maintaining a budget balance in the last decade: in 2020-2010 (including the corona year), Israel's debt-to-GDP ratio rose by 2.2% - with only four countries presenting better data.
The average debt in developed economies is 27.2% - that is, more than 12 times that of Israel.
In Germany, the debt ratio has reversed, down 9% since 2010. According to Accountant General Yahli Rotenberg, "the debt-to-GDP ratio rose by 13% this year due to the increase in government activity and the deficit to deal with the crisis. This rate decreased by about 11% and in 2019 reached a level of about 60%. "
