Credit rating agency Standard & Poor's (S&P) has downgraded the Israeli government's credit rating to A from A+, with the outlook remaining "negative," the Israeli Finance Ministry said in a statement on Wednesday.

This marks the second time this year that S&P has lowered Israel's credit ratings after a downgrade from AA- to A+ in April.

The agency stated that it sees a growing likelihood that Israel's conflict with Hezbollah, given the recent escalation of fighting, will become protracted and intensified, posing security risks to Israel.

"We now consider that military activity in Gaza and an upsurge in fighting across Israel's northern border, including a ground incursion into Lebanon, could persist into 2025, with risks of retaliation against Israel," S&P analysts said, mentioning Tuesday's Iranian missile attack against Israel.

Consequently, the agency expects a delayed economic recovery in Israel. It has revised its real growth forecasts to 0 percent in 2024 and 2.2 percent in 2025, alongside widening fiscal deficits in the short- and medium-term as defense-related spending increases.

Israel's General Accountant Yali Rothenberg said following the S&P decision that Israel should provide maximum certainty to the economy and investors and act as soon as possible to approve the state budget for 2025.

He added that the new budget should lead to the rebuilding of fiscal reserves, encourage investment in growth engines and infrastructure, address social needs, and respond to Israel's security requirements.

S&P's decision came after Moody's Ratings downgraded Israel's credit rating on Friday from A2 to Baa1, with a "negative" outlook, marking the second downgrade this year. 

Related

Go to Forum >>0 Comment(s)