A review published by Ministry of Finance chief economist Yoel Naveh shows that Israel’s balance of payments surplus soared to a record NIS3.8 billion, almost US$1 billion, thanks to a worldwide decline in the prices of oil and natural gas.
The balance of payments surplus refers to the amount by which the money coming into a country is more than the money going out during a particular period of time.
The monetary impact of the surplus registers as pressure toward appreciation of the shekel, offsetting the Bank of Israel’s policy of retaining a negligible interest rate, despite the recent interest rate hike by the Federal Reserve.
Naveh announced that the 5.1% ratio of balance of payments to GDP in the third quarter was the highest since the first quarter of 2010. He attributed the surplus to exports of goods and a drop in imports. The surplus of exports over imports reached NIS 2.5 billion in the third quarter, a historically high level.
The principal cause of the fall in imports is the drop in the prices of the energy inputs imported by Israel. Both oil and refined oil products and coal prices have fallen to historically low levels. In addition, the growing use of Israeli-produced natural gas is replacing the use of imported coal and oil for producing electricity.