To judge from what a senior source told "Globes" about his meeting with two Moody's representatives currently in Israel, four things about the Israeli economy worry the ratings agency: the aggressive policy of Governor of the Bank of Israel Stanley Fischer, the exaggerated power of Histadrut (General Federation of Labor in Israel) chairman Ofer Eini, the fiscal deficit after 2010, and the "reform fatigue" that the Israeli economy is showing.
The Moody's representatives in Israel to decide about the country's sovereign rating are Kristin Lindow, senior vice president of the sovereign risk group, and Anthony Thomas, VP and senior sovereign risk group analyst. Despite the concerns raised at the meeting, the source who met the two said that he gained the impression that Moody's did not intend to downgrade Israel's rating. "They constantly stressed that the Israeli economy, including the financial system, had been hit much less that other developed and emerging economies."
The source said that Moody's was concerned at the aggression and over-intervention on Fischer's part on the monetary level. "They don't understand how exactly he will exit from the program of currency and bond purchases, and how long the Israeli economy can sustain near zero interest rates in the light of the substantial inflationary threats. Mainly, they argue there was a duplication of US Federal reserve policy, when the Israeli reality was completely different."
Published by Globes [online], Israel business news - www.globes.co.il - on July 2, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009