PMA Issues Public Finance and Public Debt Developments Report for Q3 of 2015

The PMA issued the Public Finance and Public Debt Developments Report for the third quarter of 2015. The report reviews the latest advances and developments in relation to government finances and performance. It also features in-depth analysis of public debt developments (both domestic and external), including arrears, and their implications on the sustainability of public finance. The report also presents the most significant changes to indicators of the government ability to sustain indebtedness

The Report concludes that, compared to the previous quarter, Q3 has witnessed a notable decrease in both public revenues and grants and in public expenditure. The overall fiscal balance (after foreign grants and aid) realized a surplus of about NIS 392.3 million for this quarter, contributing to the decrease of public debt by about USD 108.9 million, or the equivalent of 4.6 per cent, compared to the previous quarter. Public revenues and grants dropped significantly by about 18.6 per cent during Q3, compared with the previous quarter to reach about NIS 4 billion. The decline is attributed to the drop in clearance revenues and in foreign grants and aid. It is worth mentioning that the drop in clearance revenues is the result of Israel releasing clearance revenues due for both Q1 and Q2 for the year 2015 in Q2 of the year, such that when clearance revenues went back to normal levels in Q3, they appeared to have significantly decreased in comparison. 

Similarly, the third quarter of 2015 witnessed a tangible decline in real public expenditure by about 10.5 per cent compared with the previous quarter to reach about NIS 3.6 billion, owing to a decline in the wages and salaries item by about 18.6 per cent and in development expenditures by about 13.6 per cent, whereas non-wage expenditure remained unchanged at about NIS 1.3 billion. It is worth mentioning that the decline in the wages and salaries item here is again not real, as the government had paid in Q2 employee wages and salaries due for Q2 and arrears from Q1together, which doubled the government payroll bill for that quarter. Thus, the payroll bill’s decline in Q3 is merely a result of figures falling back to their normal levels. 

Developments of both sides of public finances (revenue and expenditure) culminated in the shrinkage of domestic public debt leading to the drop of overall public debt to reach USD 2,236.0 million, or the equivalent of NIS 8782.2 million, to constitute about 17.5 per cent of GDP by end of Q3 of 2015, compared to about 18.3 per cent for the previous quarter. As for external public debt, it stood unchanged at around USD 1.1 billion.