After Moody’s downgrade, Bank of Israel head urges government to rectify economic issues

Bank of Israel governor Amir Yaron urges the government to tackle budgetary priorities and economic issues after US ratings agency Moody’s cut the country’s credit rating over the weekend.

Yaron urges the government and the Knesset to “act to address the economic issues” raised in the Moody’s report that led to the downgrade, in order to restore the confidence of the markets and rating companies in the Israeli economy.

“The Bank of Israel has already presented several courses of action, including the approval of the 2024 budget in the Knesset with all the adjustments included in it,” Yaron writes in a statement.

Late on Friday, Moody’s lowered Israel’s credit rating by one notch from A1 to A2, and changed its outlook to “negative,” citing the impact of the ongoing war with the Hamas terror group in Gaza on the government’s debt burden.

Yaron notes that the reasons behind Moody’s downgrade are the “uncertainty regarding when and how the war will end, and the impact the war will have on the willingness of the government and the Knesset to deal with core economic and social issues, and a change in the fiscal situation.”

“The Israeli economy is based on solid and healthy economic foundations while leading the world in the fields of innovation and technology,” states Yaron. “We knew how to recover from difficult times in the past and quickly return to prosperity, and the Israeli economy has the strength to ensure that this will be the case this time as well.”