Netanyahu says economy is ‘robust’ after Moody’s downgrades Israel’s credit rating

The rating agency cited “a deterioration of Israel’s governance.”

By World Israel News Staff

Bond credit rating agency Moody’s Investors Service on Friday changed the outlook on Israel’s credit ratings from positive to stable, prompting Prime Minister Benjamin Netanyahu to issue a statement calling Israel’s economy “robust and stable.”

The news followed an earlier report released by Moody’s in early March warning that if the government’s plans for judicial reform were implemented in full, they would “materially weaken the strength of the judiciary and as such be credit negative.”

“The change of outlook to stable from positive reflects a deterioration of Israel’s governance, as illustrated by the recent events around the government’s proposal for overhauling the country’s judiciary,” the credit rating agency said in its announcement on Friday.

“While mass protests have led the government to pause the legislation and seek dialogue with the opposition, the manner in which the government has attempted to implement a wide-ranging reform without seeking broad consensus points to a weakening of institutional strength and policy predictability,” it added.

“As a result, the risks on Israel’s rating are now balanced, leading to a stable outlook. On the downside, while the deliberations about the exact form of the judicial reform continue, the government has reiterated its intention to change how judges are selected. This means that the risk of further political and social tensions within the country remains,” said Moody’s.

It added that if, on the other hand, a solution is reached, “the positive economic and fiscal trends that Moody’s had previously identified remain.”

It went on to say that that Israel’s economy, helped by globally competitive high-tech industries, has “proven resilient to many economic and geopolitical shocks over the past decades and has grown at a rapid clip.”

Netanyahu and Finance Minister Bezalel Smotrich released a joint statement in response to the downgrade, saying “Israel’s economy is stable and robust and will remain so.”

The two blamed Moody’s analysts for not understanding “the strength of Israeli society, its unity, and its ability to overcome controversy and crises.”

“The state of Israel is a strong democracy, and because of that, Israeli citizens hold lively discourse over issues that are the center of controversy in Israeli society, and those are signs of the strength of Israeli democracy,” the statement said.

“Fierce political controversies lead to protests and can create temporary uncertainty; those are the risks that are considered and defined in the state of Israel’s economic assessments,” they said, adding that there would be no harm either to Israel’s democracy or to its economy.