Israel’s finance minister slams Moody’s for credit rating downgrade

February 12, 2024
1 min read


  • Moody’s downgraded Israel’s credit rating for the first time, citing the ongoing war in Gaza and a possible war with Hezbollah as risks to the country’s economy.
  • Israel’s finance minister criticized the decision, calling it a “political manifesto” that did not take into account the country’s economic claims.
  • The downgrade could make it harder for Israel to raise money by selling bonds and could potentially lead other rating agencies to also downgrade Israel’s outlook.
  • The Israeli economy was already struggling before the war, with concerns about governance, inflation, and a slowdown in tech investments.
  • Bank of Israel Governor Amir Yaron said the economy was resilient and showed signs of recovery after the war broke out.

Israel’s finance minister, Bezalel Smotrich, has criticized the decision by financial ratings agency Moody’s to downgrade Israel’s credit rating. Moody’s lowered Israel’s rating from A1 to A2, citing the ongoing war in Gaza and the potential for a war with Hezbollah as risks to the country’s economy. However, Smotrich argued that the decision did not take into account the country’s serious economic claims and labeled it a “political manifesto.” Israeli officials are concerned that the downgrade could lead to other major agencies also downgrading Israel’s outlook. This could make it more difficult for the government to raise money by selling bonds.

Before the war, Israel’s economy was already facing challenges. Concerns about the country’s governance, rising inflation, and a worldwide slowdown in tech investments weighed on the economy. The proposed judicial overhaul by Prime Minister Benjamin Netanyahu, which aimed to weaken the powers of the country’s courts, also raised concerns about the investment climate. Moody’s report acknowledged the “strong checks and balances” that led to the shelving of the judicial overhaul in January.

Despite the downgrade, Bank of Israel Governor Amir Yaron expressed confidence in the resilience of the Israeli economy. He noted that signs of recovery were already visible in November, the month after the war broke out. Yaron also highlighted Israel’s previous ability to bounce back after wars with Hamas, although the current conflict is longer and has strained the economy due to military expenditures and reservist callups.

Overall, the Moody’s downgrade of Israel’s credit rating has raised concerns about the country’s economic outlook and its ability to raise funds through bond sales. While there are hopes for recovery and resilience in the economy, the impact of the war and other existing challenges cannot be ignored.

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