Benjamin Netanyahu Press Conference (screenshot from Israel channel 12)
Prime Minister of Israel Benjamin Netanyahu reportedly held discussions with the S&P ratings agency to prevent it from downgrading Israel’s status. Such a move could have a traumatic effect on Israel’s economy. According to Israeli media, Netanyahu promised S&P that his government’s proposed controversial judicial reforms, which could end judicial review of the government’s actions and new laws passed by the Knesset, would not be passed as it currently stands.
Israel’s S&P rating currently stands at AA-. S&P will publish its decision regarding Israel’s economy at the end of the week.
Calcalist reported that Israel’s President Isaac Herzog was also involved in the talks with S&P.
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This comes a month after the world leading rating agency Moody’s downgraded Israel’s economic outlook from “positive” to “stable,” citing concerns over the “deterioration of Israel’s governance.” In a strongly worded, eight-page report, Moody’s cited the “deterioration of Israel’s governance” and the lack of broad consensus in implementing the proposed judiciary overhaul as indicators of weakened institutional strength and policy predictability.
A nation’s political stability is integral to a ratings agency’s determination as to its economic rating. And world leaders have expressed concern that the proposed changes to Israel’s system of government would weaken its stability.
Another critical factor in determining a credit rating is security. The current “Operation Shield and Sword” being enacted by the IDF against the Islamic Jihad terror group in Gaza and the barrage of more than 500 rockets launched by Islamic Jihad at Israel could also affect determining Israel’s rating.
Massive protests have rocked Israel over the past few months, ever since Justice Minister Yariv Levin revealed the government’s plans to alter the nature of Israel’s judicial system. The government’s judicial reform plan would significantly curtail the power of Israel’s Supreme Court to nullify legislation passed by the Knesset and also limit the authority of Israel’s attorney general. The opposition charges this would harm Israel’s democracy, eroding foreign confidence and hurting its economy. And this is why the country is now on the brink of what some describe as the biggest societal clash in Israel’s history.
