The Ministry of Finance also noted that debt-to-GDP ratio has been dropping from over 100% in 2004, and the figure is now nearing that acceptable ratio in developed economies
A press release issued last week by the Ministry of Finance (MoF) shows that Israel's national debt in 2006 was 2.7% lower than that of 2005.
The national debt at the end of 2006 totaled NIS 538 billion, and represented 86% of GDP. Of the national debt, 75% is in local currency and the rest in foreign currency.
The MoF noted that at the end of 2005 the debt-to-GDP ratio was 9% higher compared to 2006.
The MoF also noted that debt-to-GDP ratio has been dropping from over 100% in 2004, and the figure is now nearing that acceptable ratio in developed economies.
The EU has set a 60% debt-to-GDP ratio as one of the criteria for entering the monetary union; the EU average is 79%.
According to the MoF the debt-to-GDP ratio is one of the most important indicators for determining the strength or performance of the economy, and the lower the ratio, the more flexibility there is in managing the economy, particularly in times of crisis.
The debt-to-GDP ratio dropped in 2006 for a number of reasons:
Higher receipts from taxes and due to government's policy of privatization, The strengthening of the shekel vis-א-vis the US Dollar., reforms in managing state cash flows, Low inflation rate.
