Moody's: Israel political instability could lead to credit rating downgrade
Credit rating company keeps Israel at A1, but warns elections could hold up economic reforms aimed to stimulate growth.
International credit rating agency Moody's on Monday warned that the breakup of the Israeli government would have a negative impact on the country's credit rating.
The move comes some two weeks after Fitch downgraded Israel from "positive" to "stable" in its long-term foreign currency Issuer Default Rating.
Moody's has not downgraded Israel's rating, which remains at A1, but indicates that the decision to go to elections could delay reforms that are supposed to accelerate growth, as well as interfere with fiscal planning for the coming years.
In its latest report, Moody's economists write that the "lack of calm" in Israeli politics is a negative indicator vis-a-vis national debt, primarily because it holds up reforms designed to stimulate growth. The company also estimates that Israel will have 2.3 percent growth in 2014.
At the start of October, Moody's gave Israel an A1 credit rating, with a stable forecast. It noted that the rating was based on a strong economic growth model and the efficient governance.
"The key to Israel's dynamic economy is the high-tech export sector which enjoys an educated and relatively young population, as well as the highest per capita investment in research and development," said the report released last October.
