According to the Accountant General, in the last decade this index has risen by only 1.5%, compared to a jump of 48% in the eurozone • "The consistent trend of lowering the debt-to-GDP ratio is a direct result of responsible economic policies over the years.
Encouraging data
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The ratio of public debt to GDP has risen by 1.5% in the last decade, compared with a jump of 48% in the eurozone and an average of 19.1% in the "reference countries" - as defined by the Ministry of Finance.
According to the data, published today (Tuesday) in the "debt report" of the Accountant General in the Treasury, Yahli Rotenberg - since 2010 only Norway, Denmark and Germany recorded a negative debt-to-GDP ratio - with good performance from Israel.
France leads the list with a 63% increase in debt compared to GDP in the last decade, Japan with more than 46%, the average in the economies of the G20 countries is about 35%, the USA with an increase of more than 27% and Switzerland has a ratio Debt / GDP more than 6% In absolute terms, Israel's debt / GDP ratio stands at 72.4% - a better figure than developed economies but lower than the "reference countries", which also include many developing countries: "In the last decade, the State of Israel has stood out in comparison. Global in reducing the debt-to-GDP ratio, "reads the Accountant General's report. "The consistent trend of lowering the debt-to-GDP ratio is a direct result of responsible economic policies over the years, which have strengthened the country's financial strength."
It should be noted that by 2020, the debt-to-GDP ratio fell by 11%, but the corona crisis led to huge expenditures of about NIS 105 billion, which was reflected in a 20% jump in debt inventory in absolute value and an increase of more than 10% in debt-to-GDP ratio. Moderately compared to Western world countries. According to Rotenberg, "the ratio increased at a lower rate than forecast, mainly due to a relatively low reduction in GDP forecasts, as well as as a result of negative inflation and significant appreciation of the shekel against the dollar and the euro in the past year."
To cover the debt, the state raised a record amount of NIS 265 billion last year - which is 230% compared to a normal year. Despite the high fundraising load, the short-term debt index relative to GDP rose by only one percent, stabilizing at 6% at the end of the year: "These indices are low by historical comparison as a result of the Accountant General's policy of extending government debt."
The interest expense ratio in relation to debt decreased by more than half a percent in the past year and stood at 4.1% in 2020. The interest expense ratio of total government expenditure was 7.9% in 2020 compared to 9.5% in 2019. Similar to the trend in recent years, interest expense on external debt and external debt decreased NIS 900 million compared to 2019 and amounted to NIS 17.6 billion.
On the other hand, interest expenses on designated bonds increased by NIS 1 billion compared with last year and amounted to NIS 12.4 billion. The volume of interest expenses remained almost unchanged and in 2020 amounted to about NIS 38 billion. Rotenberg emphasizes that now, with the gradual exit from the corona crisis thanks to vaccines, "significant plans will be required to lead the economy to growth. It is of great importance to reduce the deficit after the crisis and return to the consistent declining trend in debt to GDP."
Senior Deputy Accountant General and Head of the Finance Division, Gil Cohen, noted: "The outbreak of the corona virus and its negative effects on capital markets and macro data "The ability to meet the exceptional financing needs in a period of volatility and great uncertainty indicates the financial strength of the state and the confidence of investors in Israel and abroad in the economy and the state's ability to meet its obligations."
