Moody’s has downgraded Israel’s credit rating to “A2” with a negative outlook, citing the impact of the ongoing war with Hamas on the country’s economy. Prime Minister Benjamin Netanyahu responded by emphasizing Israel’s strong economy and attributing the credit rating downgrade to the state of war.
Reports indicate that this downgrade marks the first of its kind in Israel’s history. Moody’s explained that the downgrade was due to the war with Hamas and its repercussions, forecasting an increase in Israel’s debt burden beyond pre-war expectations concerning Gaza.
Moody’s further highlighted the lingering risks of escalating conflict with Hezbollah, which could significantly impact Israel’s economy negatively. Netanyahu sought to downplay the significance of the downgrade, expressing confidence in the economy’s resilience and predicting a recovery post-victory.
The credit rating typically reflects a country’s ability to secure loans and fulfill financial obligations on time, affecting borrowing costs. A higher credit rating entails lower borrowing risks and better loan terms.
Israel is wary of potential future credit rating reductions by other major agencies, such as Standard & Poor’s and Fitch, amidst ongoing regional instabilities. Moody’s decision is expected to increase interest rates for state and private loans, potentially leading to stock price reductions in the Tel Aviv Stock Exchange and a depreciation of the Shekel against foreign currencies in the near future.
