The international rating agency S&P has recently lowered Israel’s sovereign credit rating in foreign currency from AA- to A+, indicating a negative outlook for the future. This reduction was expected as Moody’s had already downgraded Israel and Fitch had changed its outlook to negative.
The main reasons cited by S&P for the rating downgrade are a significant deterioration in the geopolitical situation and an increase in the state budget deficit. S&P is projecting a deficit of 8%, which is higher than the 6.6% initially budgeted, and forecasts that Israel’s public debt to GDP ratio will reach 66% by 2026.
These developments highlight the challenges facing Israel’s economy and the need for prudent fiscal management to stabilize its credit rating and address its growing debt levels. It is crucial for the government to implement effective measures to improve its fiscal position and boost economic growth in order to regain the confidence of international investors and rating agencies.
