Israel's credit rating may be lowered if war continues

According to three international credit rating agencies, war in north likely to hurt growth statistics. Standard and Poor's ratified Israel's credit rating leaving forecast at 'stable'

Gad Lior
Published: 07.26.06, 15:16 / Israel Business

The international credit rating company Standard and Poor's ratified Wednesday Israel's credit rating with a forecast remaining at "stable." However, the three international credit rating agencies – Standard and Poor's, Fitch, and Moody's – don't think that it is outside the realm of possibility that a continuation of the war will considerably worsen Israel's growth statistics, forcing them to lower Israel's credit rating in the future.

Prime Minister Ehud Olmert praised the credit agency's announcement and emphasized the absolute necessity for the government to maintain its budget discipline, specifically deficit targets and government expenditure targets – as determined by the basic outline of the government.

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Finance Minister Avraham Hirchson was also satisfied by the announcement, which followed a similar announcement from Fitch last week. "This is an important message to our community of investors about the resilience and stability of the Israeli economy, especially in the presence of the events of the north," said Hirchson Tuesday.

The agency's announcement emphasized the necessity for the government to stick to a responsible budget policy, and to continue to make reforms and structural changes.

Israel's current long-term foreign currency credit rating stands at A-minus, and at A-plus for the long-term local currency credit rating. For both foreign currency in the short-term and local currency in the short-term, Israel's rating is A-minus-1.

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