preface

1.2.4. Fiscal Developments
10
THE ISRAELI ECONOMY IN 2010
In 2010, the current balance of payments account in the government
sector showed a deficit of NIS 23.1 billion – compared with NIS 28.4
billion in 2009. In terms of GDP, this amounted to a 2.8% GDP deficit
in 2010, compared with 3.7% in 2009 - representing current income less
current expenditure for all public sector bodies: the government, local
authorities, national institutions and non-profit organizations which
obtain the majority of their funding from the government.
The decline in government deficit in 2010 reflects a 9.1% boost in
current income, following a 2.3% decline in this component in 2009.
The increase in revenue in 2010 reflects an increase in tax collection
(mainly income tax). Total income from taxes rose this year by 9.2%,
compared with a 2.6% decline in 2009.
Government spending rose this year by 6.4%, compared with 5.4% in
2009. Public spending, accounting for 61.9% of overall government
expenditure, increased by 6.5% in current prices (3.7% in fixed prices)
in 2010. Interest expense on outstanding government debts rose by
6.9%.
Transfers from the government sector to private consumption marked a
6.5% rise in 2010, following a 9.3% rise in 2009. In 2010, NIH
(National Institutes of Health) allocations accounted for a 7.2% growth
out of the transfer increase.
The overall balance of payments for the government sector, obtained
from summing-up the net balance in the current account and the net
balance in the capital account, reflects a GDP deficit of 4.2% in 2010,
compared with 5.3% in 2009.
1.2.5. Balance of Payments
2010 marked an increase of 18.56% in exported goods and services,
after a decline of 12.5% in 2009 and 5.9% increase in 2008. Industrial
exports (excluding diamonds) rose this year by 23.25%, after declining
by 9.2% in the previous year. Income from tourist service exports rose
by 27.5%, compared with a 24.3% decline in 2009.
Exported services, comprising mainly software and R&D, increased by
4% in 2010, compared with a decline of 10.0% in 2009. Furthermore,
2010 marked a rise of 6.3% in agricultural exports and of 52.48% in
diamond exports.
BDO Israel