Your current location is:{Current column} >>Text
Israel economy will recover, Yaron says after Moody's cut, but action needed By Reuters
{Current column}4People have watched
IntroductionBy Steven Scheer and Ari RabinovitchJERUSALEM (Reuters) -Bank of Israel Governor Amir Yaron said on ...
By Steven Scheer and MT4 trading software rentalAri Rabinovitch
JERUSALEM (Reuters) -Bank of Israel Governor Amir Yaron said on Sunday the country's economy was strong and would recover from the impact of the war, but called on the government to address issues raised by Moody's (NYSE:) after the agency downgraded Israel's sovereign credit rating.
To boost confidence of markets and ratings companies in Israel, it was key for "the government and the Knesset act to address the economic issues raised in the report," Yaron said.
"We knew how to recover from difficult times in the past and quickly return to prosperity, and the Israeli economy has the strength to ensure that this will be the case this time as well," he said.
Yaron, since the Palestinian Islamist group Hamas' Oct. 7 massacre of mostly civilians in Israel, has urged the government to maintain fiscal discipline and trim spending on items not related to Israel's reprisals against the group in Gaza.
In the first-ever downgrade for Israel, Moody's cut the country rating to "A2," five notches above investment grade, from A1 on Friday, and kept its credit outlook at negative, meaning a further downgrade is possible.
Moody's cited material political and fiscal risks from the war, adding "Israel's budget deficit will be significantly larger than expected before the conflict."
The downgrade, if prolonged or if it leads to further such moves, would raise borrowing costs for Israel and could lead to budget cuts and tax hikes to keep the budget deficit from spiraling out of control.
Israel's debt-to-GDP ratio, Moody's noted, looked likely to peak at 67% by 2025, versus 62.1% in 2023.
Still, that ratio has been much higher in the past during periods of economic crises for Israel, but "there was never any delay in the government's debt repayments," Yaron said.
Last month, S&P Ratings told Reuters it could lower Israel's credit rating if the war with Hamas expands to other fronts.
Lawmakers last week gave initial approval to a revised 2024 state budget that added tens of billions of shekels to finance the war and compensate those affected, as well as a rise in the budget deficit this year to 6.6% of GDP from 2.25%.
Prime Minister Benjamin Netanyahu on Friday reacted to Moody's move on Friday, saying "the rating will go back up as soon as we win the war - and we will win."
Statement: The content of this article does not represent the views of FTI website. The content is for reference only and does not constitute investment suggestions. Investment is risky, so you should be careful in your choice! If it involves content, copyright and other issues, please contact us and we will make adjustments at the first time!
Tags:
Related articles
U.S. jobless claims drop to 242,000 By
{Current column}-- The number of Americans filing for unemployment insurance dropped by more than projected last wee ...
Read moreShip sunk by Houthis threatens Red Sea environment, Yemeni government says By Reuters
{Current column}ADEN, Yemen (Reuters) -The UK-owned Rubymar, attacked by Houthi militants last month, has sunk in th ...
Read moreWhy is Citi 'wildly bullish' on AMD stock despite 110% rally in price By
{Current column}The AMD (NASDAQ:) stock price has had a tremendous rise over the last few months, rising 110% since ...
Read more
Popular Articles
- AMD's lackluster forecast sparks selloff in shares By Reuters
- Ship sunk by Houthis threatens Red Sea environment, Yemeni government says By Reuters
- Asia stocks climb; gold, bitcoin drift after hitting record highs By Reuters
- US Congress leaders reach deal on FY24 spending bills, averting government shutdown By Reuters
- Taiwan Semiconductor, AT&T, American Express: 3 things to watch By
- US diesel exports to Europe dip on plummeting refining output By Reuters
Latest articles
-
Dow futures fall 95 pts; caution ahead of debt ceiling negotiations By
-
Japan government considers calling end to deflation, Kyodo reports By Reuters
-
US dollar slips before Powell speech, bitcoin resumes rally By Reuters
-
Asian stocks dip as China weighs, rate anxiety builds before Powell By
-
Debt limit optimism, Zelensky's G7 visit, Alibaba falls
-
Crude Oil Set for More Gains as OPEC+ Extends Cuts: $83 Likely Ahead of Key Data