The public debt ratio of GDP for 2020 amounted to about 73.1% compared to about 60.0% in 2019,
The government debt ratio of GDP amounted to about 71.6% compared to about 58.5% in 2019
The Accountant General, Yahli Rotenberg: “The debt-to-GDP ratio rose by 13% this year as a result of the significant increase in government activity and the deficit to deal with the corona crisis. This increase comes after a decade in which this rate gradually decreased by a cumulative 11%. This increase is lower than expected both in light of the economy’s resilience as reflected in GDP contraction data and as a result of the effect of market factors on debt data.We anticipate that in the coming years the debt-to-GDP ratio will continue to rise, but there is great importance back to a declining path in this ratio. In the period after the economy recovers from the crisis. “
Yesterday (Thursday), the Accountant General published the first estimate of the public and government debt ratio of GDP for 2020. The debt ratio of GDP is a key indicator of the financial strength of the State of Israel and in determining its credit rating.
According to the estimate, the public debt-to-GDP ratio, which includes local government debt, is expected to be 73.1%. The government debt ratio from GDP is expected to stand at 71.6%.
Graph 1 – The ratio of public and government debt to GDP in Israel
Source: Ministry of Finance
In 2020, due to dealing with the corona crisis, there was an increase of aboutNIS 78.8 billion In government expenditure compared to 2019, along with a decrease of about29.4 NIS 1 billion in total government revenues compared to 2019, which led to a sharp increase in the government’s financing needs and an increase of about 13% in the debt-to-GDP ratio compared to 2019.
This increase is lower than expected[1], Both as a result of the effects of market factors on debt (mainly the appreciation of the shekel in the past year against the dollar and the euro, inflation and interest rates) and as a result of the relatively low impact on GDP relative to forecasts. The final estimate of the debt-to-GDP ratio as well as a broad analysis of government debt will be published in the annual report of the Debt Unit in the Accountant General’s Division.
International comparison of the debt-to-GDP ratio
The graphs below show an international comparison of the debt-to-GDP ratio in 2020 and the change in this ratio in recent years.
Graph 2 – International comparison of the public debt ratio of GDP in 2020
Source: Ministry of Finance
Other countries- IMF Fiscal Monitor, October 2020.
* Countries of reference
Graph 3 – Estimated change in the public debt ratio of GDP in the years 2019-2020
Graph 4 – Estimated change in the public debt ratio of GDP in the years 2010-2020
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Source: Ministry of Finance
Other countries- IMF Fiscal Monitor, October 2020.
* Countries of reference
[1] From the multi-year budget plan for the years 2021 to 2023 that was submitted to the government in September 2019