Israel – Fitch Ratings Agency announced, yesterday, Tuesday, the cancellation of the negative monitoring on Israeli long-term sovereign debt, and confirmed its rating on it at “A+” with a negative outlook.
Fitch’s decision came in a statement today, despite the continuation of the Israeli war on the Gaza Strip, and the continuing economic and financial risks surrounding Tel Aviv.
She stated that the geopolitical risks associated with the war are still high, and “we believe that the risks threatening the credit file have expanded, and their impact may take longer to evaluate, so we have removed the negative watch from its rating.”
In the first month of the war on Gaza, Fitch announced that Israel’s sovereign debt rating was on negative watch, and warned that any major escalation of the conflict might lead to a downgrade of the rating.
The agency added: “Negative expectations are still present as long as the war continues, including the risk of regional escalation… We expect a jump in the near-term in the ratio of debt to gross domestic product, and a continued rise in military spending.”
She added: “The risks of expanding the scope of the current conflict in Israel remain present, to include large-scale military confrontations with multiple actors, over a long period of time.”
On more than one occasion, Israel announced its intention to enter the city of Rafah in the southern Gaza Strip, “and we expect the war to continue into the second quarter of 2024, with the risk of continuing intensive operations following that,” according to the agency.
The war on Gaza and the economic turmoil associated with it contributed to a 6.6 percent decrease in revenues in 2023, while the 12.5 percent increase in spending was driven by relief measures for those affected and military spending.
Fitch expects the debt-to-GDP ratio to rise to 65.7 percent in 2024, and 67 percent in 2025.
Anatolia
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2024-04-03 17:42:17
