Priya Patel
TLDR:
Israel’s finance minister, Bezalel Smotrich, has criticised financial ratings agency Moody’s for downgrading the country’s credit rating. The move is likely to lower investor confidence in the Israeli economy. Moody’s stated that ongoing war in Gaza and the potential for conflict with Hezbollah will have a negative impact on Israel’s economy. This is the first time that Moody’s has downgraded Israel’s credit rating. Smotrich dismissed the decision, calling it a “political manifesto” that lacked serious economic claims. Prime Minister Benjamin Netanyahu stated that the downgrade was due to the ongoing war and pledged that the rating would rise again once the conflict ends.
Israel’s finance minister, Bezalel Smotrich, has criticised financial ratings agency Moody’s for downgrading the country’s credit rating. In its announcement, Moody’s warned that the ongoing war in Gaza and a potential conflict in the north with Hezbollah could adversely impact Israel’s economy. This is the first time that Moody’s has lowered Israel’s credit rating, which is used by investors to determine the riskiness of investing in a country or government.
Smotrich dismissed the decision, referring to it as a “political manifesto” that lacked serious economic claims. Prime Minister Benjamin Netanyahu stated that the downgrade was solely due to the ongoing war, and once the conflict ends, the rating would increase again.
Israeli officials are concerned that Moody’s downgrade could lead to other major rating agencies downgrading Israel’s outlook. This could make it more difficult for the government to raise funds through bond sales, potentially impacting the country’s economy. However, analysts suggest that the length of the war will determine the extent of the impact on the economy.
For Israel, maintaining a positive credit rating is vital for attracting international investment and keeping borrowing costs low. A lower credit rating could lead to higher interest rates, making it more expensive for the government to borrow money and potentially hurting economic growth.
Israel’s economy has performed relatively well in recent years, with low unemployment and strong growth, despite ongoing security challenges. However, Moody’s downgrade reflects concerns about the impact of the current conflict on the country’s economic stability.
It remains to be seen how Moody’s downgrade will affect Israel’s economy and its ability to raise funds in the future. The government is likely to take steps to address the concerns raised by Moody’s in order to regain investors’ confidence and maintain the country’s economic stability.
