Standard & Poor’s (S&P) left Israel’s credit rating unchanged at AA-. The move came after speculation that Israel’s current political upheavals – specifically the controversial judicial reforms proposed by the government of Prime Minister Benjamin Netanyahu – could cause such agencies to lose confidence in Israel’s economic outlook.
In its assessment of the rating, S&P said Israel’s “resilient economy, strong balance of payments, and a moderate level of public debt,” were factors in its decision to leave Israel’s AA- rating unchanged.
S&P reported that in 2022 Israel had 6.5% economic growth. But the firm predicted just 1.5% growth in 2023, citing continuing global factors as a reason.
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But this also came with one very big caveat. S&P also said “persistent domestic and regional political and security risks,” could cause problems in the future for Israel’s economy.
It was just one month ago that fellow credit ratings agency Moody’s downgraded Israel’s credit rating for those same reasons. Moody’s downgraded Israel’s economic outlook from “positive” to “stable”, citing concerns over the “deterioration of Israel’s governance.”
According to Israeli media, Benjamin Netanyahu personally negotiated with the firm to keep Israel’s credit rating unchanged. He was said to have 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, in order to ally their concerns about the future if Israel’ political stability. But no specific concessions offered on the judicial reforms were revealed.
Calcalist reported that Israel’s President Isaac Herzog was also involved in the talks with S&P.
Well, both Netanyahu and his Finance Minister Bezalel Smotrich chose to ignore all of this when responding to the good news from S&P. The two issued a joint statement taking credit for the rating, saying it came because of their economic policies.
“Israel’s positive rating has been left unchanged in a challenging period for the global economy.” They said.
“It is an expression of confidence in the correct economic policy that we are leading,” Netanyahu and Smotrich added. “We will soon pass the state budget in the Knesset in order to ensure our continued efforts to strengthen the economy and fight the cost of living for the benefit of the citizens of Israel.”
