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S&P says Knesset gridlock should not affect credit rating, yet

Political instability in Israel is likely to continue, but the country’s fiscal situation should not be impacted in the immediate term, the S&P credit rating agency says in a memo, indicating that it will not downgrade Israel’s rating.

However, it warns that should the Knesset deadlock persist, it could make it difficult for policymakers to reach consensus on economic matters.

“Fiscal risks could build if finding consensus on a balanced fiscal policy proved difficult as a result of persistently fragmented domestic politics,” the bulletin warns.

It also says it expects growth to recover soon, and lauds Israel for having sound debt policy, which it says continue to justify its rating of AA-/Stable/A-1+.

Interim Finance Minister Israel Katz calls the document a “show of support for Israel’s economy.”

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