"Israel's credit rating has been on a rising trend in recent years, unlike the trend among many developed economies around the world," says Christian Esters, Senior Director, Analytical Manager Sovereign and International Public Finance Ratings, at S&P Global Ratings. Esters said that S&P expected to see the beginning of a process of consolidation of Israel's public debt in the new year.
Esters, who spoke today at the Eli Hurvitz Conference on Economy and Society 2020 held by the Israel Democracy Institute, said that Israel's main strength in the view of the rating agencies lay in the annual surplus in its balance of payments, ranging between 3% and 4% of GDP.
"The fact that Israel has had a current surplus on its balance of payments in each of the past seventeen years has brought us to the position in which it has the largest surplus in the world among countries that do not export raw materials," Esters said. The cumulative surplus has also led to the accumulation of foreign exchange reserves by the Bank of Israel now amounting to more than 40% of GDP, reserves that lend Israel additional stability.
Esters estimated that the Israeli economy would claw back the product lost as a result of the coronavirus pandemic only in 2022. He said that S&P estimated that Israel's public debt would stabilize at 80% of GDP, but he said that the increase in debt was not excessive, and was even considered moderate in comparison with other developed Western countries such as the US, the UK, and France. He said that the average growth in debt in the developed countries was of the order of 15% of GDP, and in some of the larger countries it was even 20% of GDP.
So far this year, S&P has downgraded the ratings of 20% of the countries that it covers, most of them developing countries. 30 more countries have negative rating outlooks, indicating a high probability that their ratings will be downgraded.
Published by Globes, Israel business news - en.globes.co.il - on December 14, 2020
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