Fitch Affirms Israel’s A+ Rating with a Stable Outlook, Despite Covid-19 Crisis

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By Aryeh Savir/TPS • 14 January, 2021

Fitch Ratings affirmed on Wednesday Israel’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘A+’ with a Stable Outlook.

The report noted Israel’s strong external finances, a diversified high value-added economy, and solid institutional strength against a high government debt/GDP ratio and ongoing political uncertainty and security risks.

Prime Minister Benjamin Netanyahu welcomed the “very good news about the economy.”

“The third-largest rating company in the world has followed in the footsteps of its predecessors and has also left Israel’s credit rating unchanged at its high A+ level, a very high level, with positive indicators,” he noted.

Standard and Poor’s (S&P), the global credit rating company, in November, left Israel’s credit rating unchanged at its high AA- level with a stable outlook, despite the global Coronavirus (COVID-19) financial crisis that the country is experiencing.

The Moody’s international rating agency announced in October that Israel will maintain its high A1 credit ranking, despite the economic crisis.

“This is a certificate of honor for the Israeli economy and for the State of Israel. We are getting back to life in both health and the economy, to the routine and life that we love,” he declared.

Fitch expects the government deficit to remain high in 2021, at about 9% of GDP, after the pandemic-related spending pushed it to 11.7%in 2020.

However, the credit rating firm forecasts the deficit to narrow to 4.3% of GDP in 2022, as there will probably be new revenue-raising measures and most coronavirus-related spending commitments will be phased out.

The agency projects Israel’s real GDP growth of 5.4% in 2021 and 4.% in 2022, after a contraction of 3.9% in 2020.

Minister of Finance Yisrael Katz said that the report “is an important achievement for our country.”

“The government policy during the crisis, extensive assistance alongside maintaining budget frameworks, is highly praised and is receiving high scores. We will continue to promote vaccines and return the economy to activity and growth,” he stated.

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