Israel's worsening economy and growing strains on the budget as revenues continue to shrink may lead to a near-term sovereign credit ratings cut, ratings agency Fitch told Reuters today.
Fitch, which last year placed Israel's outlook on "negative", said prospects for an economic recovery have diminished and pressures on the country's public finances have intensified. Fitch rates Israel A-.
"There's a greater than 50 percent chance the rating will go down based on current trends," Richard Fox, senior director of sovereign ratings at Fitch, told Reuters. "Clearly, recovery prospects have become less buoyant and that has a bearing on the fiscal outlook."
He said the international ratings agency was watching the 2003 budget debate closely and warned that failure to pass the budget "would be a negative".
Fears of a sovereign credit ratings downgrade grew -- leading to a drop in the shekel's rate against the dollar -- after Standard & Poor's lowered its rating for Israel's top two banks to BBB+ from A-. Last week, Moody's Investors Service told Reuters it did not intend to lower Israel's credit rating in the near-term.
Published by Globes [online] - www.globes.co.il - on 26 September, 2002