Ministry of Finance: The public and government debt ratio for 2021 has decreased compared to 2020

The Accountant General of the Ministry of Finance, Yahli Rotenberg, published today (Wednesday) a first estimate of the public and government debt ratio of GDP for 2021. The debt ratio of GDP is a key indicator of the financial strength of the State of Israel and its credit rating. The final estimate of the debt-to-GDP ratio will be published in two"The annual debt of the debt unit in the Accountant General’s Division.

During the decade preceding 2020, the public debt-to-GDP ratio decreased by about 11% and reached a rate of 59.5% and the government debt-to-GDP ratio reached a rate of 58.0%. This level was historically low and allowed fiscal flexibility for the government in dealing with the corona crisis during 2020. At the end of 2020, the public-debt ratio was 71.7% and the government-debt ratio was 70.2% following the corona crisis.

Photo: Ministry of Finance spokeswoman

In 2021, the debt-to-GDP ratio decreased by 1.4% to 70.3% and the government-to-GDP ratio decreased by 1.7% to 68.5%. This decline reflects a higher decline than the forecasts of financial entities in Israel and abroad"This is due to high economic growth, an increase in government tax revenues, privatization and the appreciation of the shekel against central currencies.

Photo: Ministry of Finance spokeswoman

According to the estimate, the public debt ratio of GDP, which includes debts of local authorities, is expected to stand at 70.3%. The government debt ratio from GDP is expected to stand at 68.5%.

The Minister of Finance, Avigdor Lieberman, said: "The level of debt and GDP, together with the high growth figures, the increase in state revenues and the low level of deficit are evidence of the strength of the Israeli economy and responsible fiscal policy.".

Photo: Ministry of Finance spokeswoman

The Accountant General, Yahli Rotenberg, stated: "The decrease in the debt-to-GDP ratio is explained by significant growth in economic activity, with the GDP forecast for 2021 standing at approximately NIS 1,524.5 billion."And reflects real growth of 6.7%. At the same time, the government deficit in relation to GDP decreased to 4.5% in 2021, compared with a deficit of 11.4% in 2020. The reduction in the government deficit in relation to GDP is mainly due to a 30% increase in government revenue. The decrease in the debt-to-GDP ratio in 2021 comes after an increase of about 12% in the debt-to-GDP ratio in 2020 compared to 2019, the year in which there was an increase due to the corona crisis. It is important to return to the outline of a decrease in the debt-to-GDP ratio in the coming years, in order to maintain fiscal flexibility and support the state rating.".

Photo: Niv Kantor

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