Prime Minister Benjamin Netanyahu and President Isaac Herzog recently spoke to senior executives at credit rating agency Moody’s in an attempt to convince them not to lower Israel’s credit rating, Channel 12 news reports.
Moody’s is due to publish its annual credit rating of Israel on Friday evening. The ratings agency warned last month that the government’s planned judicial reform law could lead to “negative consequences for the credit rating”. According to the Channel 12 report, both Netanyahu and Herzog have tried to dissuade Moody’s from downgrading Israel by stressing that the legislation is on hold for the time being and there are attempts to reach a broad consensus.
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It is very exceptional that the Prime Minister and the President are in contact with the credit rating agencies. Contact is usually made through the Department of the Accountant General of the Ministry of Finance, and in some cases also through the Minister of Finance. The direct participation of the highest figures in the country indicates the high degree of pressure felt prior to the publication of the ranking announcement.
The credit rating itself is not expected to change tomorrow. Before a rating agency downgrades a country’s credit rating, it usually downgrades it first. And this is exactly what could happen. According to market estimates, there is great concern that Moody’s will announce that Israel’s rating outlook has been downgraded from positive to stable. There is also the risk of a more drastic step, downgrading Israel to a negative level, but the likelihood of that happening is much lower.
Moody’s currently assigns Israel an A1 rating, similar to the United Kingdom, Italy and several European Union countries. Israel’s rating outlook was raised from stable to positive in April 2022, among other things due to the impressive way the Israeli economy has emerged from the Covid pandemic crisis.
Published by Globes, Israel business news – en.globes.co.il – on April 13, 2023.
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