In a world where countries are going into hock at an alarming pace, Israel has beaten its own goal on debt reduction by three years. At the dawn of 2017, Israel’s debt to GDP [Gross Domestic Product] ratio – a key factor used to determine international credit ratings – fell to 60.4 percent. The government had set 2020 as the goal for when the ratio would fall to 60 percent.
In that area, Israel was performing better than most advanced nations. In the U.S., debt to GDP ratio – the amount that an economy would have to produce in order to pay off its debts – was 104 percent, while Canada’s was 91.5 percent, France’s 98.1 percent, and the U.K.’s 89.2 percent. Overall in the EU, the figure was 85.2 percent. The world “champion” is Japan, where the ratio is 229.2 percent.
The development is all the more admirable, officials at the Bank of Israel said, because it was taking place at a time when Prime Minister Binyamin Netanyahu and Finance Minister Moshe Kachlon had reduced taxes for average workers. The BOI had been convinced that the 60 percent goal was unattainable unless taxes were raised.
Speaking at Sunday’s Cabinet meeting, Netanyahu said that “we have seen a dramatic fall in our national debt this year, beating our goal on debt to GDP ratio by several years. This performance by the Israeli economy is exceptional among Western countries. We also saw this past year a 20-percent increase in industrial productivity investment, a statistic that indicates that investors have faith in the Israeli economy.”