“An achievement for the Israeli economy, the Israeli people, and especially for future generations,” declared Minister of Finance Moshe Kahlon on Sunday, of the drop in Israel’s debt-to-GDP ratio to 62.1 percent, Globes reported.
Kahlon’s statement was based on an initial estimate prepared by Ministry Accountant General Michal Abadi-Boiangiu. According to his calculations, the ratio, which includes debts of the local authorities, is projected to drop substantially to 62.1 percent. Excluding the local authorities’ debts, the decline would be from 62.4 percent in the preceding year to 60.5, a 1.9 percent decrease.
The ratio of debt to GDP is crucial in determining financial soundness and the national credit rating. The final estimate will be published in a few months as part of the annual report by the Financing and Credit section of the Ministry of Finance Debt Accountant General Department.
Israel’s success in this area has proved exceptional in comparison to other countries in the West. Only Germany and Slovenia performed better than Israel in this respect in 2015-16. Since 2007, Israel has managed to cut its debt-to-GDP ratio by 11%, more than in any other developed country in the world, except for Norway.
The Ministry attributed the reduction in the debt ratio to several factors, including the nominal growth rate, the low budget deficit, and market factors, such as the negative increase in the Consumer Price Index, the strengthening of the shekel against the dollar and euro, along with the ongoing fall in the interest rate on the government debt, for which the Accountant General and her department took credit.
Kahlon called it “an economic achievement for future generations,” and said it would mean more money available for health, education, welfare, young couples, the disabled, senior citizens and Holocaust survivors, and other social challenges the government has taken upon itself.
In a moment of gloating, the finance minister remarked: “I am truly sorry that we have disappointed all the prophets of doom over the past year, who swamped us with headlines about near-zero growth and rising debt that only goes up. We are sorry, and we have something more to tell you: we will continue to surprise everyone with budget responsibility and a free economy that will foster growth for the future generations.”