Prime Minister Benjamin Netanyahu and President Isaac Herzog recently spoke to senior executives at credit ratings agency Moody's in efforts to persuade them not to cut Israel's credit rating, Channel 12 News reports.
Moody's is due to publish its annual credit rating of Israel on Friday night. Last month the ratings agency warned that the government's planned judicial overhaul legislation might bring, "negative consequences for the credit rating." According to the Channel 12 report, Netanyahu and Herzog both tried to dissuade Moody's from downgrading Israel by stressing that for the time being the legislation has been suspended and there are attempts to reach a broad consensus.
It is highly exceptional for the prime minister and president to be in contact with the credit rating agencies. Usually contact is made through the Accountant General's Division in the Ministry of Finance, and in some cases also by the Minister of Finance. The direct involvement of the highest figures in the country indicates the high degree of pressure felt before publication of the rating announcement.
The credit rating itself is not expected to change tomorrow. Before the rating agency downgrades a country, it usually first downgrades the rating outlook. And that's exactly what could happen. According to market estimates, there is major concern that Moody's will announce that Israel's rating outlook has been downgraded from positive to stable. There is also a risk of a more drastic step, of downgrading Israel's rating outlook to negative, but the likelihood of this is much lower.
Moody's currently gives Israel an A1 rating, similar to the UK, Italy and many EU countries. Israel's rating outlook was raised from stable to positive in April 2022, among other things because of the impressive way that the Israeli economy moved out of the Covid pandemic crisis.
Published by Globes, Israel business news - en.globes.co.il - on April 13, 2023.
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