• Sun. Mar 3rd, 2024

Moody’s lowering of Israel’s credit rating: A political stunt or a reflection of uncertainty?


Feb 11, 2024
Smotrich criticizes Israel’s credit rating decline: “A handful of economists in New York are making the assessments”

The Israeli Finance Minister, Bezalel Smotrich, has criticized the decision of international rating agency Moody’s to lower Israel’s sovereign credit rating for the first time in history. In a statement released on Monday, Smotrich called the move “a political stunt” and emphasized that the Israeli economy is strong and capable of supporting military efforts and returning to rapid economic growth.

Smotrich argued that Moody’s decision was based on an unfounded worldview and a lack of faith in Israel’s sustainability and viability. He also accused the agency of not recognizing terrorist organizations like Hamas and Hezbollah, as well as hinting that it would not have lowered the rating if Israel had agreed to a ceasefire proposal with Palestine.

Smotrich expressed gratitude to other Israeli economists who worked with rating agencies but also questioned the authority of economists in New York to assess situations in Israel. The report from Moody’s expressed concern about the ongoing conflict between Lebanon and Israel, military escalation on the border, instability within Israel’s government, and civil society’s negative outlook on its creditworthiness.

The downgrade was attributed to several factors: full-scale conflict with Hezbollah, potential damage to Israeli infrastructure, weakening public institutions which may lead to a decrease in ratings. However, Moody’s report stated that if the government showed effectiveness in formulating policies that support economic growth and restore security after hostilities end, it would change its outlook from negative to neutral.

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