International credit rating agency Standard & Poor's announced on Friday that it was maintaining its rating for the State of Israel at A+.
Standard & Poor's sees Israel's economy continuing to be robust in the face of shocks on the financial markets, thanks to its diversity, its balance of payments surplus, and the flexibility still available in monetary policy.
The agency states that it expects the Israeli government to continue managing public expenditure responsibly and to promote structural reforms, and says that it does not believe that the security risks will materialize in the next two years.
Standard & Poor's also points out that higher than projected tax receipts in 2015 have continued into 2016, and that the coalition has agreed on a two-year budget for 2017 and 2018, with a deficit target of 2.9% of GDP.
The agency does however mention housing as a main challenge facing policy makers in Israel, and says that government measures introduced so far to boost supply will have limited impact in the short term.
It also states that Israel's geopolitical situation has improved, and that responsible fiscal policy will lead to a substantial reduction in the country's debt burden, which could mean a rating upgrade. On the other hand, a rise in the fiscal deficit and in government debt or a decline in international support would be liable to isolate the Israeli economy and to lead to a downgrade of its rating.
Accountant General in the Ministry of Finance Michal Abadi-Boiangiu said in response to the announcement, "Confirmation of the credit rating testifies to the strength of the Israeli economy and to the importance of responsible economic policy. The Accountant General's Division will maintain its commitment to pursuing a correct debt policy and to a continuing reduction in Israel's debt to GDP ratio."
Published by Globes [online], Israel business news - www.globes-online.com - on August 7, 2016
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