Israel blasts Moody’s downgrade
Israeli leaders have lashed out against Moody’s downgrade of the country’s credit ratings on Friday. The country’s sovereign rating was lowered from A1 to A2 and its outlook kept at “negative” due to what the ratings agency believes are the political and fiscal risks stemming from the country’s continuing war with Hamas.
Israeli Finance Minister Bezalel Smotrich on Sunday slammed the downgrade – the first in the country’s history – as a “political manifesto.” He said it was based entirely “on a pessimistic and unfounded geopolitical worldview” and did “not include serious economic arguments.”
Prime Minister Benjamin Netanyahu also dismissed the move, arguing that it was merely a result of the ongoing conflict and not a reflection of the state of Israel’s economy.
“The rating downgrade is not connected to the economy, it is entirely due to the fact that we are in a war. The rating will go back up the moment we win the war – and we will win the war,” he said in a statement on Saturday.
Bank of Israel Governor Amir Yaron also defended the country’s economy, which he said is “rooted in strong and healthy fundamentals.” He praised Israel’s macroeconomic and monetary policies and the economy’s “rapid recovery from the initial shock of the war.”
“We have known how to recover from difficult periods in the past and rapidly return to prosperity, and the Israeli economy has the strength to ensure that this will happen this time as well,” he said.
Yaron noted, however, that the reasons behind the downgrade are the “uncertainty regarding timing and manner of the end of the war,” as well as “the war’s impact on [our] willingness to deal with core economic and social issues.” He urged the government to act quickly to deal with the problems raised by Moody’s in order to strengthen the confidence of international partners in the country’s economy.
The other two major agencies, S&P and Fitch, also placed Israel on negative ratings watch back in October, but neither has so far moved to downgrade the country’s credit score.
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