Israel's government debt drops to 73.3% of GDP

At the end of 2011, the government debt totaled NIS 633 billion, compared with NIS 608 billion at the end of 2010.
 
Government debt reached 73.3% of gross domestic product (GDP) in 2011, compared to 74.9% the previous year, the Debt Management Unit of the Accountant General's office at the Finance Ministry announced last Monday.
 
At the end of 2011, the government debt totaled NIS 633 billion, compared with NIS 608 billion at the end of 2010.
 
The Ministry of Finance explains that the nominal growth in government debt is due to NIS 12 billion positive net funding, and to the rise in inflation, which contributed an additional NIS 7 billion to the growth in government debt.
 
In addition, Ministry of Finance data show that public debt which measures the government’s debt plus the debts of all municipal authorities, as a proportion of GDP fell 1.6% to 74.7%. Treasury Accountant- General Michal Abadi- Boyanjo said credit-rating agencies place great importance on debt-to- GDP ratios when they make their decisions.
 
Israel’s government debt is relatively low when compared to the 17-nation euro bloc, whose combined debt-to- GDP ratio is forecast by the European Commission to rise above 90% this year.
 
However, the Government's debt-to- GDP ratios it is still not low enough, according to the Organization of Economic Cooperation and Development, which recommended in its biennial report on Israel in December that the government prioritize reducing debt to 60% of GDP by 2020.