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Israel public debt burden slides to 60.9% of GDP in 2022

Cityscape, Urban, Building REUTERS/Amir Cohen
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Israel’s public debt fell in 2022 to 60.9 percent of gross domestic product from 68 percent in 2021, the finance ministry said, citing strong economic growth and a budget surplus.

The ministry said economic growth of 6.3 percent and a decline of a billion shekels in government debt led to the large drop in the debt-to-GDP ratio in 2022, which is lower than in most of Israel’s Western peers.

The government debt ratio, which excludes the debt of municipalities and public bodies, dipped to 59.2 percent of GDP from 66.2 percent, the ministry added.

Israel recorded a budget surplus of 0.6 percent of GDP last year on the heels of a higher than expected 14 percent gain in tax income. It was Israel’s first annual surplus in 35 years.

“The cumulative decrease over the past two years in the debt to GDP ratio and the return to the downward trend are of great importance in preserving financial stability and fiscal flexibility,” said accountant general Yali Rothenberg in a statement.

This supports Israel’s ranking in “the challenging macroeconomic environment that is expected to accompany us in 2023 as well”, he added.

Israel’s economy is expected to grow by around 2.8 percent in 2023, while S&P Global Ratings projects a budget deficit of two percent of GDP