International credit rating agency Standard & Poors (S&P) has left Israel's rating unchanged at A, and the country's forecast rating as "stable". In the wake of the war in Gaza, political instability ahead of next month's elections, the absence of an approved budget, the global recession, which is now affecting Israel and the expected budget deficit, S&P economists had been expected to lower Israel's credit rating.
It was only last year that S&P raised Israel's credit rating to A, its highest ever rating. The rating was approved today in all three criteria: the shekel debt; foreign currency debt; and transfer and convertibility assessment, which remains AA.
S&P economists wrote, "approval of the rating reflects the Israeli government's commitment to fiscal discipline and the strength of the Israeli economy after five years of strong growth at the rate of about 5%, despite the tense political and fiscal atmosphere which currently reins."
Regarding the war in the south the S&P economists explained that events in Gaza were not expected to significantly damage Israel's ability to raise capital and they added, "the war with Hamas will only influence Israel's economy in the short term, although the deterioration of the geo-political situation, including an armed conflict with Iran, would put heavy pressure in the direction of lowering Israel's credit rating."
Published by Globes [online], Israel business news - www.globes-online.com - on January 20, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009