Palestine Economy Portal

Israeli economic officials are anticipating a reduction in the credit rating of Israel, as international credit rating companies will start a series of "Zoom" meetings with the Minister of Finance, the Governor of the Bank of Israel and economic officials, in order to obtain clarifications about Israel's difficult economic situation, according to the "Yediout Ahronot" website today.

Today, Standard & Poor’s will hold the first of these meetings with Finance Minister Yisrael Katz, and the Governor of the Bank of Israel, Amir Yaron. The three global credit companies - Standard & Poor's, Moody's and Fitch - will demand the Israeli Finance Ministry to explain how it will deal with the difficult Israeli economic data, as there are nearly a million unemployed, huge budget deficits, and high negative economic growth. Especially the failure to approve a budget for the current year even though it is nearing its end, and not preparing a budget for the next year yet.

According to Yediout Ahronot, economists at the three credit rating companies warned Israel, months ago, that in light of such a situation, and while there is no budget and economic data are difficult, there is a possibility of a downgrade of the credit rating.

It is noteworthy that the current credit rating of Israel is A + according to "Fitch" company, A1 according to "Moody’s", and AA- according to "Standard and Poor's" It is noteworthy that the Triple-A indicates great stability for the state's economy, while C indicates a country's economy is unstable, and cannot be granted any loans.

The state’s classification indicates its economic immunity and its ability to repay loans. The higher the rating, the higher the state’s ability to obtain loans with lower interest and better terms for many years. This was the case for Israel, which recently took out a loan of 1.5 billion euros at an annual interest rate of 0.2%. Credit rating also has an impact on banks, companies and public institutions, and on investment decisions in the country.

Currently, the credit rating of Israel is AA, like Britain, Belgium, France, the United States and others, and it is among the top 20 countries in the world. It is estimated that lowering Israel's credit rating would harm countries and companies with amounts reaching 15 billion shekels, especially since the loans will be granted for short and medium periods and Israel recycling a portion of the loans it receives.

The Governor of the Bank of Israel recently warned that in the event of a downgrade of Israel's credit rating, this would quickly and suddenly harm its economy, and that every effort should be made to prevent this by responsibly managing budgetary policy.

Credit rating companies lowered the rating of dozens of countries, following the decline in their economic conditions due to the ongoing Corona crisis, and between these countries, South Africa, Argentina, Mexico and Lebanon. The negative expectations of many countries, including Japan, Australia, Bahrain, Chile, Canada and Italy were also reduced.

Source: Arab 48