Smotrich on Moody’s downgrade: Israel’s economy is strong

Finance Minister Bezalel Smotrich gave an initial reaction last night to the downgrade of Israel’s sovereign rating by Moody’s to Baa1. In his statement, Bezalel tries to soften the blow, promising to pass the budget, hinting at planned austerity measures, perhaps in an attempt to send a signal to other rating agencies. It is worth noting that, unlike previous occasions, Smotrich refrained from launching a sharp attack on the decision itself.

“The Israeli economy is bearing the yoke of the longest and most expensive war in the country’s history,” Smotrich said. “The Israeli economy is a strong economy that has attracted investment so far.” He added, “With God’s help, we will approve a responsible budget with the required restrictive measures, and after victory in the war, those who lowered the rating will return it to the true level of the Israeli economy.”

In its decision, Moody’s not only notes the high risks facing the Israeli economy, but also criticizes the government’s response to those risks. “The main driver for the downgrade is our view that geopolitical risks have intensified significantly, to very high levels, with material negative consequences for Israel’s creditworthiness in the near and long term. In the long term, we believe that the Israeli economy will be more sustainable.” Weakened by the military conflict than had been expected earlier,” its decision said, but added: “In our view, the significant escalation in geopolitical risks also indicates a decline in the quality of Israeli institutions and governance that has not fully mitigated actions harmful to sovereignty. credit metrics.”

Published by Globes, Israel Business News – en.globes.co.il – on September 29, 2024.

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