Israel has one of the highest government debt ratios in the world: 103% of GDP in 2002, according to Bank of Israel figure published today. Israel has a higher debt ratio to GDP than most OECD countries, surpassing Canada. Only four OECD countries had a higher debt ratio: Belgium, Greece, Italy and Japan.
The Bank of Israel predicts the ratio will grow to at least 106% in 2003.
Israel also pays more interest payments on its government debt as a proportion of GDP than any OECD country. Interest payments on the government debt, under international standards, amount to 8.1% of GDP, compared with 3.1% in Germany, 2.8% in France, 2% in the US, and 1.2% in Japan. The OECD average is 2.2%.
The Bank of Israel warns that a continued and uncontrolled increase in the interest payments on the government debt will reduce the government’s ability to freely set budget priorities and direct greater resources toward infrastructure investments and social needs.
Interest payments on the government debt, under international standards, reached NIS 39.5 billion in 2002, or 8.1% of GDP, amounting to a fifth of the state budget.
Published by Globes [online] - www.globes.co.il - on March 24, 2003