By: TOI Staff; Times of Israel – timesofisrael.com
Standard & Poor’s cites steady growth, improved fiscal outlook in decision to upgrade Jewish state’s credit score to AA-
The Standard & Poor’s credit scoring agency on Friday upgraded its credit rating for Israel, citing the Jewish state’s steady economic growth and improved debt outlook.
With the raising of its credit score from A+ to AA- with a stable outlook, Israel notched its highest ever rating from S&P and other international credit rating firms.
Prime Minister Benjamin Netanyahu hailed the upgraded rating as “a reflection of the strength of the Israeli economy.”
In announcing its decision, S&P cited Israel’s stable growth and improved fiscal position in light of the sharp reduction in net government debt.
Despite Israel’s fractious politics, S&P pointed to the passage of the 2019 budget as a sign of fiscal discipline.
“Although public debt remains relatively high, we now think that fiscal slippages leading to a significant reversal of the debt path are unlikely,” S&P said. “This is based on our belief that, absent global trade shocks, Israel’s economic growth outlook will remain solid and allow the government to accommodate pressures coming from social and infrastructure spending, as well as a potential moderate escalation of security risks.”
“Israel has demonstrated sound economic performance since the global financial crisis, with a current GDP of about $140 billion (or 50%) larger than in 2010, the current account in a sustainable surplus, and unemployment at historical lows,” it added.
The ratings agency also predicted growth of 3.3 percent a year from 2018 to 2021, which it said would be fueled by private consumption, corporate investment and exporting of services.
While noting Israel has a “prosperous, modern, and diversified economy” with high growth rates, S&P said “high exposure to external and domestic security risks weigh on the country’s creditworthiness.”
The improved credit score from S&P came after Moody’s raised its rating outlook for Israel last month.
“In the last three years the Israeli economy has soared to the best macro data in its history. The confidence expressed in us by the strongest economic bodies in the world enables us to continue to grow the economy,” said Finance Minister Moshe Kahlon in a statement after S&P announced the move.
Bank of Israel Governor Karnit Flug praised S&P for upgrading Israel to AA-, crediting the country’s steady economic growth in recent years to sound fiscal policy.
“The decision reflects the confidence of the international institutions in the policies of the government and the monetary policies the Bank of Israel has led that have contributed to the growth of the economy and the ability of the government to meet its future commitments,” she said.
Prime Minister Benjamin Netanyahu also praised the upgraded Israeli ranking, saying in a Saturday Facebook post that it “reflected of the strength of the Israeli economy as well as the correct and responsible economic policy that we are leading on behalf of all Israeli citizens.”