Good news for Israel's credit rating: the ratio of public debt to GDP fell by no less than 1.8% in 2015, the Ministry of Finance today reported. Ministry of Finance sources today said, "The fall in the debt burden is a stunning achievement for the Israeli economy."
Ministry of Finance Accountant General Michal Abadi-Boiangiu today published an initial estimate for the ratio of public and governmental debt to GDP for 2015. According to the estimate, a 64.9% public debt-to-GDP ratio, including the local authorities, is projected, 1.8% less than the ratio in the preceding year. An even steeper drop in the government debt-to-GDP ratio is projected: from 65.5% to 63.4%, a 2.2% decrease.
The debt-to-GDP ratio constitutes one of the main indicators of Israel's economic soundness, and is a material consideration in determining its credit rating. The 2015 figures establish Israel as a country that has managed to lower its debt ratio more than any other Western country since 2008. The fall in the debt ratio is also expected to lower financing costs on the debt, which totaled NIS 38 billion in 2014, in the current budget, thereby freeing up money for spending by the civilian ministries.
This year's decrease in the debt ratio is attributable to the lower-than-expected budget deficit (only 2.1%) and market factors, primarily the decrease in the Consumer Price Index (49% of the public debt is linked to this index), the lower interest rate on the debt, and the steep fall in the shekel-euro exchange rate.
The Accountant General's Department is publishing its initial estimate very soon after the end of the year, owning to better work by the Department's Government Debt Management Unit and Financing and Credit Division. The final estimate for the debt-to-GDP ratio will be published in the Department's annual report at the beginning of the second quarter. The estimate is likely to change according to the final figure for GDP, which has not been published yet by the Central Bureau of Statistics.
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016