The government debt has increased by about 20% and reached almost a trillion shekels

The price of the economic corona: The government debt has reached almost a trillion shekels. In 2020, government debt increased by about 20% and stood at NIS 984 billion each, compared to NIS 823 billion last year.
The government deficit more than tripled during 2020 and has reached unprecedented proportions since the 1980s. Add to this the dramatic drop in tax revenues recorded at the beginning of the crisis and the ongoing budget, it will be possible to understand the magnitude of the event that took place in the offices of the Accountant General Unit, responsible for providing funding for government and economic needs.
The need to finance the expenditure on unemployment benefits, the purchase of medical equipment, business assistance and more was immediate and the relatively small local market does not know how to "absorb" large-scale recruitments that are made in a short time. Fortunately, the economy entered the crisis on "favorable" terms with a low debt-to-GDP ratio compared to international and a high credit rating. During the crisis, Israel's credit rating was even reaffirmed twice, which also gave impetus to loans at relatively low interest rates from abroad.
In the opening remarks of the report, Rotenberg writes that "the professional management of government debt, which combines a long-term strategy and short-term adjustments, supported the government's ability to significantly increase the volume of debt raising without significant additional risk and without an increase in current financing costs."
However, Rotenberg hints that in the future the government will be forced to reduce its spending as well as raise taxes in the economy in order to reduce the inflated deficit. "As a forward-looking vision, fiscal measures of convergence will be required. These measures will probably be required on both the expenditure and revenue side, with an emphasis on approving the state budget and economic growth. It is very important to reduce the deficit after the crisis To the product, "writes the Accountant General.
To the question of Walla! Money, did the Ministry of Finance's debt unit begin to prepare for the possibility that there will be no functioning government in the context of the need to reduce the deficit? Rotenberg replied:
"I will not address it. I will just say that we are constantly making alternatives. We are really champions in making alternatives, but we have to examine it in the face of reality and we see reality like any citizen. It is clear to all of us that there must be political certainty and priority. , A state budget that gives certainty to the whole system. This is the king's way. That is where we as a country should strive, given all kinds of situations we have many contingency plans, some are relatively easy to implement, some are complex in any constellation. Sometimes any change you want to make is complex. "Legislation or a government decision, which even sometimes is difficult to accept today. So the way to implement changes is complex but possible."
In the context of the need to reduce the deficit, Rothenberg said that in the future fiscal measures will be needed on both the revenue side and the expenditure side. "It has to be done wisely, so as not to intensify the crisis. There may be things that also need to be streamlined."
Rotenberg added, in response to a question from reporters about the fact that part of the debt was spread over many years so that future generations would also have to pay it: "We need to make sure that our children have a reduced debt burden following the fiscal measures. They will have more."
Rotenberg added, in response to the question "Is there a chance that the State of Israel will not meet the debt burden": "No, there will be no such situation."
As in previous years, most of the government funding came from the domestic market - the volume of issues increased threefold compared to 2019, gradually and with the assistance of the Bank of Israel's acquisition program. "The convenient and rapid access to the capital markets in Israel and abroad attests to the training of investors in the Israeli economy and its financial strength, and to the state's ability to establish broad funding in a short time, even during a global crisis," the Ministry of Finance said in a report.
In the last decade, Israel has stood out in terms of global comparison in reducing the debt-to-GDP ratio. In 2020, the debt-to-GDP ratio rose sharply by 12.4% compared to 2019. However, in an international comparison, this is not an exceptional figure - Israel is far below other developed countries, which have increased this ratio by more than 20%.
The report also states that against the background of the crisis in the external market, the use of global, private and public issues was expanded. In total, the volume of issues in the external market amounted to NIS 74 billion. "Issues were characterized by high demand from prominent and high-quality foreign investors," it said.
It should be noted that the interest rates at which 100-year bonds were issued are considered expensive, which was widely criticized at the time.
Rotenberg also referred to the issue of credit ratings and said: "Rating companies look at things in a comparative way, so * any discourse that says 'wow tomorrow the rating went down' is not a professionally correct discourse *.
The risks to the rating are risks that if we after the crisis do not deal with the consequences of the crisis and do not return to the path of proper growth and fiscal convergence and other things, then we may be issued a yellow card.
In the meantime we are enjoying the credit of the rating companies, for dealing with the corona steps. Our handling of the crisis seems right. All governments in the world have dealt with all sorts of corona boxes, most of the aid is on the same lines of support in the business world,
The unemployed and support for economic growth - and the rating companies see this and say you are in the right direction. The rating agencies see it. In the end, we hear from them that they see that we have actually managed to cope. "