Israel's national debt in 2006 was 2.7 percent lower than that of 2005.

The debt totaled NIS 538 billion at the end of 2006, and represented 86 percent of GDP.

At the end of 2005 the debt-to-GDP ratio was 9 percent higher. This ratio is one of the most important for determining the strength of the economy, and the lower it is, the more flexibility there is in managing the economy, particularly in times of crisis.

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The ratio has been dropping from over 100 percent in 2004, and the figure is now nearing that acceptable in developed economies. The EU has set a 60 percent debt-to-GDP ratio as one of the criteria for entering the monetary union; the EU average is 79 percent.

The debt ratio dropped in 2006 for a number of reasons, including higher receipts from taxes and privatization, reforms in managing state cash flows, the strengthening of the shekel, low inflation and accounting changes. Of the national debt, 75 percent is in shekels and the rest in foreign currency.