In its periodic review for investors, international credit rating agency Moody's today wrote that the peace process between Israel and the Palestinians would be frozen until further notice, following the election of Donald Trump as president.
In view of the fall to 62.1% in Israel's debt-to-GDP ratio in 2016, Moody's cited debt management as one of the strong points of the Israeli economy.
In addition to the fact that Israel is one of the few countries whose debt has decreased since the outbreak of the global credit crunch, Moody's takes favorable notice of the structure of Israel's debt and the surprising fact that Israel's debt financing costs are very low even for a country with an AAA rating.
In the context of the investigations of Prime Minister Benjamin Netanyahu, Moody's comments that the Attorney General began a criminal investigation of the prime minister on suspicion of bribery in January. Although Netanyahu has survived similar investigations in the past, the current accusations are serious enough to end his term in office. Moody's writes that if Netanyahu is forced to resign, new elections are likely, because Netanyahu has no successor in the Likud. Moody's adds that Netanyahu has been the unchallenged leader of the Likud since Ariel Sharon left the party in 2005.
Moody's reaffirmed Israel's A1 credit rating in September 2016 and retained its stable outlook for Israel. The agency warns that if the government's determination to keep the debt-to-GDP ratio on a downward path wanes, it is likely to lower Israel's credit rating, while geopolitical crises causing economic upheaval could have the same effect.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 26, 2017
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