Priya PatelTLDR:
– Israel’s finance minister, Bezalel Smotrich, has criticized Moody’s decision to downgrade Israel’s credit rating, calling it a “political manifesto” that lacks serious economic claims.
– Moody’s downgraded Israel’s credit rating from A1 to A2, citing concerns over the ongoing war in Gaza and the potential for a war in the north with Hezbollah to negatively impact the country’s economy.
– Smotrich and Prime Minister Benjamin Netanyahu argue that the downgrade is due to the current war, and that once it ends, the rating will improve again.
– Israeli officials are concerned that the Moody’s downgrade may influence other major agencies to also downgrade Israel’s outlook, making it harder for the government to raise funds through bond sales.
Israel’s finance minister, Bezalel Smotrich, has criticized Moody’s decision to downgrade Israel’s credit rating, accusing the financial ratings agency of making a “political manifesto” that lacks serious economic claims. Moody’s lowered Israel’s credit rating from A1 to A2, citing concerns over the ongoing war in Gaza and the potential for a war in the north with Hezbollah to adversely affect the country’s economy. This is the first time Moody’s has downgraded Israel’s credit rating.
The downgraded rating, though still carrying relatively low risk, may impact Israel’s economy as it may lead other major rating agencies to also downgrade Israel’s outlook. This would make it more difficult for the government to raise funds through bond sales. Israeli officials fear that the downgrade could have lasting effects on the country’s economy, especially if the war in Gaza continues for an extended period of time. However, some experts believe that the impact will be less significant if the war is not prolonged.
Prime Minister Benjamin Netanyahu defended Israel’s economy, stating that the downgrade is solely due to the fact that the country is at war. He promised that once the war ends, the rating would improve again. Bank of Israel Gov. Amir Yaron reassured that the Israeli economy is resilient and already showing signs of recovery. However, previous concerns about Israel’s governance, rising inflation, and a worldwide slowdown in tech investments have put pressure on the economy.
The Moody’s report also raised concerns about Prime Minister Netanyahu’s proposed judicial overhaul, which could weaken Israel’s investment climate. The report acknowledged the positive development that the plan was shelved in January, praising the “strong checks and balances” in Israel.
