Fitch Ratings keeps Israel’s ‘A’ credit rating on negative outlook

Fitch Ratings says Israel’s “A” credit rating remains on negative outlook, as the rating agency warns that the country faces “continued rise in public debt, unresolved security issues,” and “a fractious domestic political environment” that could weaken its growth prospects and fiscal trajectory.

The rating agency notes that Israel’s rating is “supported by a diversified, resilient and high value-added economy and strong external finances against a high public debt/GDP ratio, still high security risks, and a record of unstable governments that has hindered policymaking.”

“Israel’s national election, scheduled for 27 October, remains highly competitive, with no consistent polling evidence that either of the main blocs can secure a 61-seat majority at the Knesset,” Fitch says. “We believe the outgoing government may remain in office as a caretaker government for a few months, before a coalition is eventually found or new elections called.”

Fitch’s negative outlook on Israel’s rating means the country could face a downgrade. A lower rating raises credit costs for the government, businesses, and households.