noted. the improvement in macroeconomic conditions together with enhanced resilience of the banking sector have helped to contain macrofinancial risks. the systemic risk indicator ( sri ) – the barometer of systemic risk used by the bank – confirms that risks have moderated across the macrofinancial landscape. the decline in inflation is one of the key contributors. on the external front, the rise in the fx reserves of the country to us $ 7. 3 billion as at end - december 2023 has helped to consolidate the country ` s resilience against external shocks. risks from the banking sector have fallen considerably with strong capital and liquidity buffers. at the aggregate level, both the household and corporate sectors have been exhibiting sound financial positions, despite relatively high interest rates and inflation. risks to financial stability from the household sector have subsided. key debt serviceability metrics of the household sector have improved. in particular, the ratio of debt servicing cost to income and to gdp are below pre - pandemic levels – at 16. 8 per cent and 6. 0 per cent respectively, in december 2023. in addition, household indebtedness relative to gdp has gradually declined, as the economy expands. the financial resilience of the household sector is further evidenced by its robust asset quality. the ratio of non - performing loans to total loans of the sector with banks fell to a multi - year low to reach 1. 8 per cent in december 2023. corporate sector activities maintained good momentum amid a favourable macroeconomic landscape. corporate indebtedness to banks relative to gdp dwindled further while earnings grew in tandem with the sustained economic expansion. credit risk from the corporate sector stayed relatively low, demonstrating benign risk from the business environment. the banking sector ensured continuous flow of credit to the economy. the annual growth of credit to the private sector reached 5. 1 per cent in january 2024, from 6. 5 per cent in september 2023. the growth was primarily led by the expansion of household credit at an annual rate of 10. 5 per cent in january 2024, as against 11. 8 per cent in september 2023. corporate credit grew at an annual rate of 1. 5 per cent in january 2024, relative to 2. 8 per cent in september 2023. the asset quality of the banking sector improved in the last quarter of 2023. the overall non - performing loan ( npl ) ratio dropped to 4. 4 per cent in december 202

by high levels of inequality and poverty. inequality in economic income – income before taxes and transfer payments – is not exceptional by international standards. but the tax and transfer payments policy is less active than in other countries in reducing inequality. therefore, inequality in disposable income – income after direct taxes ( which are progressive ) and transfer payments ( benefits ) – is high. inequality is not predestined. in the same way, the dimensions of poverty in economic activity are not exceptional, but the government ’ s policy to reduce poverty, which is relatively modest, is reflected in a particularly high poverty rate by international standards in terms of disposable income. bis central bankers ’ speeches the trends i have outlined, or a low productivity growth rate, processes that are expected to further slow future growth, together with high levels of poverty and inequality in disposable income, bring into sharper relief the need to focus government policy on encouraging productivity and reducing inequality and poverty. so what can we do? we can continue, with greater vigor, implementing ( with emphasis on the term implementing ) policies to include population groups in employment ( the program to reduce gaps with the arab community that was supposed to have been discussed by the government included many positive components in this area ) ; act to increase human capital – both in the framework of the education system and through professional and technical training – in order to increase productivity an earning power ; act to remove impediments to growth, through investment in infrastructure, improving the business environment, increasing competition in industries where it is insufficient, promoting reforms in essential infrastructures, and supporting r & d, including in low technology industries. there is also room to upgrade the public services, and for adjustments in the tax system through benefits – for instance by increasing the earned income tax credit ( negative income tax ), and more. if we act decisively to implement multi - year plans, most of which exist but are implemented sluggishly, we will be able to maximize the immense potential of the israeli economy for the good of all its citizens. bis central bankers ’ speeches