Israel Government Debt Management Unit

The Israel Government Debt Management Unit is the Ministry of Finance unit responsible for financing the State of Israel and managing the government debt portfolio. It operates within the Accountant General’s Department and forms part of the Financing, Debt, and Credit Division, which oversees debt issuance, liquidity, guarantees, government collection and related financing functions.^[1]

Institutional role

The Government Debt Management Unit, commonly referred to in Ministry of Finance publications as the GDMU, is the operational arm through which Israel raises debt and manages the state’s debt portfolio. It is housed in the Accountant General’s Department of the Ministry of Finance (Israel). The Ministry describes the broader Financing, Debt, and Credit Division as responsible for all financing activities within the Accountant General’s office, including government debt management, funding of the deficit, treasury management and liquidity, state guarantees, the government collection system and government insurance.^[1]

The GDMU’s institutional position is significant because public borrowing is not merely an accounting function. It connects fiscal policy, cash management, domestic capital-market development and international investor relations. The GDMU finances government activities while balancing borrowing cost against risk exposure. In its annual debt reporting, the unit states that its mission is to finance government activities while serving the long-term strategic objectives of government debt management for the State of Israel.^[2]

The unit therefore sits at the intersection of several parts of Israel’s public financial architecture. The elected government and Knesset determine budgets and borrowing needs through fiscal decisions. The Ministry of Finance and Accountant General implement financing plans. The Bank of Israel acts as banker to the government for Israeli-currency banking activity, and government bonds are traded in Israel’s capital market, including through infrastructure connected to the Tel Aviv Stock Exchange.^[4]

Main responsibilities

The unit’s central task is to ensure that the government has sufficient financing to meet budgetary and refinancing needs. This includes funding the deficit, refinancing maturing debt, maintaining adequate liquidity and choosing the channels, maturities and structure of government borrowing. The GDMU’s annual report describes issuance planning as based on financing needs derived from the expected deficit and the cash-flow requirements of refinancing existing debt.^[2]

Its responsibilities also include the composition and risk profile of the debt stock. Israel’s debt portfolio contains tradable domestic debt, non-tradable domestic debt and foreign-currency debt. The GDMU’s debt issuance strategy is implemented through these three main channels: tradable domestic issuance, non-tradable domestic issuance and foreign debt issuance.^[2]

The domestic tradable market is central to the unit’s work. Ministry of Finance materials state that the Issuance Department within the GDMU’s Front Office is responsible for issuing Israel government bonds and conducting switch and buyback auctions in the domestic tradable market.^[1] Switch auctions and buybacks are standard public-debt tools used to manage refinancing profiles, improve liquidity in benchmark bonds and smooth the maturity structure of the debt portfolio.

Foreign-currency borrowing is another part of the mandate. The Global Debt Capital Markets and Foreign Currency Transactions Department is responsible for issuing bonds in foreign currency and executing hedging transactions on foreign-currency debt stock.^[1] This department also manages relationships with sovereign credit-rating agencies and global investor relations, functions that are especially relevant when Israel accesses international capital markets or communicates with foreign institutional investors.^[1]

Organizational structure

The Ministry of Finance describes the GDMU as being composed of three offices: Front Office, Middle Office and Back Office.^[1] This structure is common among sovereign debt offices because it separates market execution, risk analysis and operational processing.

The Front Office handles market-facing issuance and transaction activity. It includes the Issuance Department, which manages domestic government bond issuance and domestic switch and buyback auctions. It also includes the Global Debt Capital Markets and Foreign Currency Transactions Department, which manages foreign-currency bond issuance, hedging transactions, rating-agency relationships and investor relations with Israel’s global investor base.^[1]

The Middle Office performs strategy, risk and oversight functions. The Risk Management Department is responsible for the long-term strategy of the government debt portfolio and the issuance strategy, analyzing refinancing, liquidity, market and credit risks.^[1] The Middle Office Department oversees market-making activities in government bonds, ranks primary dealers according to primary- and secondary-market performance, and monitors the Ministry of Finance bond-lending facility.^[1] The Domestic Debt and Liquidity Department is responsible for the government’s cash flow in shekels and foreign currency and for helping ensure that funding sources meet the government’s financial needs.^[1]

The Back Office is responsible for debt payments, receipts, accounting and amortization schedules. The Ministry states that it maintains accounting of government debt transactions in the government’s Merkava system and makes all government debt payments.^[1] This operational role is essential because debt management requires reliable settlement, coupon payments, principal repayments and recordkeeping across domestic and foreign-currency liabilities.

The Ministry’s New York office also reports to the Financing, Debt, and Credit Division. According to the Ministry, the New York office is responsible for the relationship with the Israel Bonds organization and its fiscal agent, and it also functions as part of the GDMU for global bond investor relations and Ministry of Finance delegations in North America.^[1]

Debt-management objectives

The GDMU’s stated objective is to finance government activity while serving long-term strategic objectives for government debt management. Its policy balances the cost of issuing debt with exposure to risk and supports development of the Israeli capital market, especially the government bond market.^[2]

This balance between cost and risk is the core discipline of sovereign debt management. Shorter-term debt may at times appear cheaper, but it can increase refinancing risk if large volumes mature during market stress. Long-term fixed-rate debt can reduce rollover risk but may have higher interest cost. Foreign-currency debt can diversify funding sources and access global investors, but it may expose the sovereign balance sheet to exchange-rate movements unless hedged. The GDMU’s role is to evaluate such trade-offs within the broader fiscal and macroeconomic context.

The unit’s annual report states that its debt-issuance strategy is determined using models, indicators and simulations intended to minimize financing costs within a desired threshold of risk.^[2] The report also notes qualitative considerations, including government bond-curve structure, liquidity, development and deepening of bond markets, and broadening the investor base.^[2]

These objectives mean the GDMU is not only a borrower. It is also an institution involved in shaping the quality and depth of Israel’s government bond market. A liquid sovereign yield curve supports pricing for corporate bonds, bank funding, institutional portfolios and broader capital-market activity. For that reason, sovereign debt management can influence the development of domestic fixed-income markets even though the unit’s primary obligation is to fund the government.

Issuance channels and instruments

Israel’s government debt is raised through domestic and external channels. The GDMU identifies three main issuance channels: tradable domestic debt, non-tradable domestic debt and foreign debt.^[2]

Tradable domestic debt consists of government bonds issued into the local market. These bonds are used to finance the government and provide benchmark securities for Israel’s capital market. The Ministry of Finance publishes practical information such as monthly issuance plans, latest issuance results, primary dealer rankings, debt-to-GDP reports and Accountant General interest rates through its Financing, Debt, and Credit Division webpages.^[3]

Non-tradable domestic debt is a separate channel. In Israel, a substantial portion of non-tradable domestic debt has historically been associated with long-term institutional savings arrangements, especially pension savings. In the 2024 annual debt report, the government debt portfolio was described as including tradable domestic debt, non-tradable domestic debt and foreign-currency debt; the report’s portfolio presentation showed non-tradable domestic debt as a major component of the government debt stock.^[2]

Foreign debt issuance allows Israel to borrow in international markets and in foreign currencies. The GDMU’s foreign-currency activities are handled by its Global Debt Capital Markets and Foreign Currency Transactions Department. This department also executes hedging transactions on foreign-currency debt stock and maintains investor relations with the global investor base.^[1]

Israel also maintains official filings in overseas securities markets. In a 2026 filing with the U.S. Securities and Exchange Commission, the State of Israel filed an annual report on Form 18-K voluntarily and listed Ministry of Finance officials including the Senior Deputy Accountant General and the Head of Global Debt Capital Markets and FX Transactions.^[5] Such filings provide investors with standardized sovereign information and support access to international capital markets.

Relationship with the Bank of Israel

The GDMU is part of the Ministry of Finance, not the central bank. However, its work interfaces with the Bank of Israel because the central bank acts as banker to the government. The Bank of Israel states that, under Section 48(a) of the Bank of Israel Law, the Bank is the sole banker of the government for banking activity in Israeli currency, and that the government manages all local-currency accounts and some foreign-currency accounts at the Bank.^[4]

The Bank of Israel also explains that the government may, with the Bank’s agreement, obtain services from banking corporations or financial entities only in order to manage the government’s debt and fiscal activity.^[4] This legal and operational framework means that debt management and government liquidity operations require coordination between the Ministry of Finance and the central bank, even though their institutional mandates are distinct.

The Bank of Israel’s Banking and Financial Services Unit provides government ministries with banking services such as money transfers, interest calculations, daily account statements and balance confirmations.^[4] These services are separate from monetary policy, which is conducted by the Bank of Israel through its own policy framework, including the Monetary Committee of the Bank of Israel and the Bank of Israel interest rate.

Market operations and primary dealers

A modern government bond market depends on issuance mechanisms, secondary-market liquidity and reliable settlement. The GDMU’s Middle Office Department monitors market-making activities in government bonds and ranks primary dealers according to their performance in the primary and secondary markets.^[1] Primary dealers are financial institutions that participate in government bond issuance and help support secondary-market liquidity.

The Ministry of Finance’s public Financing, Debt, and Credit Division page lists primary dealer rankings among its useful information items, along with monthly issuance plans and latest issuance results.^[3] These publications help market participants understand government supply plans and auction outcomes, improving transparency in the government securities market.

The GDMU also monitors the Ministry of Finance bond-lending facility.^[1] Bond-lending facilities can help market functioning by allowing dealers to borrow specific government securities that are scarce in the secondary market. Such facilities may reduce settlement problems and support liquidity in benchmark bonds.

Debt indicators and transparency

The GDMU publishes annual debt reports that provide data on Israel’s debt portfolio, issuance strategy, risk indicators and market developments. Its 2024 annual report states that government debt increased by about 17.9% in 2024, reaching NIS 1,329 billion compared with roughly NIS 1,127 billion in 2023.^[2] The same report states that the public debt-to-GDP ratio rose to roughly 67.9% in 2024 and the government debt-to-GDP ratio rose to roughly 66.5%.^[2]

The 2024 report attributes the rise in debt ratios to financing and deficit-servicing needs.^[2] It also notes that pre-planned issuance is based on expected deficits and refinancing requirements, with adjustments made in response to financial-market developments and the state’s financing needs.^[2]

Debt-to-GDP ratios are key indicators for sovereign investors, rating agencies and fiscal policymakers because they compare public debt with the size of the economy. However, the level of debt is only one measure. The maturity profile, interest-rate structure, currency composition, investor base and refinancing concentration are also important. The GDMU’s risk-management function addresses several of these dimensions by analyzing refinancing, liquidity, market and credit risks.^[1]

Transparency is an important part of the unit’s role. Annual reports, issuance calendars, auction results and debt-to-GDP publications give market participants information about the government’s financing program. This supports predictability and can improve market functioning, particularly during periods of elevated borrowing needs.

International investor relations and rating agencies

The GDMU’s Global Debt Capital Markets and Foreign Currency Transactions Department is responsible for relationships with credit-rating agencies that rate Israel as a sovereign and for investor relations with Israel’s global investor base.^[1] These functions are important for international borrowing because foreign investors often rely on sovereign disclosures, rating-agency assessments and direct engagement with debt-management officials.

The Ministry of Finance’s New York office supports this work in North America. The office manages relations with the Israel Bonds organization and its fiscal agent, and it serves as part of the GDMU for global bond investor relations and Ministry of Finance delegations in North America.^[1]

The unit’s presence in international markets also requires compliance with disclosure practices in relevant jurisdictions. The State of Israel’s 2026 Form 18-K filing with the U.S. Securities and Exchange Commission was signed in Jerusalem on June 30, 2026 by Ministry of Finance officials, including the Senior Deputy Accountant General and the Head of Global Debt Capital Markets and FX Transactions.^[5]

Significance in Israel’s financial system

The Israel Government Debt Management Unit is a core institution in Israel’s public finance system. Its decisions affect the timing, structure and risk profile of government borrowing. Its issuance activity supplies benchmark bonds to the domestic market, contributes to the development of the shekel yield curve and influences the liquidity of Israeli government securities.

The unit is also important for fiscal resilience. During periods of higher expenditure, slower growth or market stress, the government’s ability to finance itself at reasonable cost and manageable risk depends on credible debt-management operations. The GDMU’s annual reporting emphasizes that the volume of debt funding directly affects the debt-to-GDP ratio and the interest burden on the state budget.^[2]

The GDMU does not set fiscal policy, monetary policy or financial regulation. Fiscal choices are made by the government and legislature; monetary policy is handled by the Bank of Israel; and securities-market regulation falls under bodies such as the Israel Securities Authority. The GDMU’s role is narrower but essential: to execute the state’s borrowing program, manage the debt portfolio and maintain the operational and market relationships needed for Israel’s sovereign financing.