At the end of 2011, government debt as a proportion of GDP was 1.6% less than at the end of 2010, at 73.3%, the Debt Management Unit of the Accountant General's office reported today. 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 (including debt of local authorities) as a proportion of GDP fell 1.6% to 74.7%. Interest payments on debt and National Insurance reached NIS 36.3 billion. Despite the nominal rise in interest payments, the rate of interest payments as a proportion of GDP fell in 2011 to 4.2%, compared with 4.3% in 2010.
In response to the data, Minister of Finance Yuval Steinitz said, "The continuing reduction of debt as a proportion of GDP, especially in view of stark rises in other countries, testify to the government's fiscal discipline and long-term economic policies, and contributes to the growth of the economy and to foreign investment in Israel."
Accountant General Michal Abadi-Boiangiu said, "A proportion of debt to GDP is a major factor in determining a country's credit rating, and lowering this ratio contributes to raising a country's credit rating and to lowering fundraising costs."
Published by Globes [online], Israel business news - www.globes-online.com - on February 27, 2012
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