Israel's national debt has hit a new record: It rose by 4.9%, or NIS 27 billion, in the first half of 2009, to NIS 574 billion. As the economy is in recession and gross domestic product is shrinking, that is expected to cause the debt-to-GDP ratio to rise from 78.3% at the end of 2008 to between 84% and 84.4% at the end of 2009.

The debt-to-GDP ratio is one of the most important indicators of economic strength and stability. At the end of last year, Israel's ratio was one of the highest in the developed world. But the global economic crisis may actually improve Israel's relative position, as many Western countries - including the United States - have increased their deficit spending by much more than Israel has.

The Finance Ministry's accountant general released figures yesterday showing that the treasury issued NIS 26 billion in new debt in the first six months of the year, mostly to cover this year's huge anticipated budget deficit of NIS 44.4 billion, or 6% of government spending. The state actually issued NIS 60 billion in bonds in the first half of the year, but NIS 34 billion of it was to roll over existing debts. Of the NIS 60 billion, NIS 48 billion was in negotiable shekel bonds, NIS 10 billion was in foreign currency issues and the rest was in nonnegotiable shekel obligations.

Despite the huge debt offerings, there was still heavy demand for the bonds, and the issues were oversubscribed. The average maturity of the bonds was 7.1 years, compared to 6.4 years for the overall national debt.

The majority of this year's issues, 56%, was in shekel bonds with fixed interest, while 20% was in shekel bonds linked to the Consumer Price Index. An additional 7% carried variable shekel interest rates, and 17% was in foreign currency bonds.

Accountant General Yehoshua Oren said the mix of bond types was based on the treasury's goals for managing the national debt, which include increasing the percentage of shekel debt at fixed interest rates while reducing the amount of CPI-linked, variable-interest and foreign-currency debt.

The real question is where the economy is headed. Most economic indicators continued to fall in the second quarter of 2009, but the pace of the drop is moderating. A few indicators were even positive, as new figures from the Central Bureau of Statistics show.

Exports of goods rose 1.4% in the second quarter of 2009, in annual terms, after falling 25.3% in the previous quarter. Retail sales also rose 5.1% in the April to June period, after rising 4.2% in the first quarter.

At the same time, imports of raw materials fell 14.5% in the second quarter, following a huge 47.4% drop in the previous quarter.

The number of overnight stays by tourists in Israeli hotels fell 12.9% for the quarter, following a 20.8% fall in the first three months of the year. But Israelis partly made up for the shortfall, as their overnight stays rose 15.7%.

Credit card purchases were up 9.5% for the quarter, a sign of a pickup in consumer spending.