• Mon. Feb 26th, 2024

Israel’s Finance Minister Criticizes Moody’s Lowering of Sovereign Credit Rating: A Political and Economic Analysis

ByEditor

Feb 11, 2024
Smotrich criticizes Israel’s credit rating decline: “A handful of economists in New York are making the assessments”

The Israeli Finance Minister, Bezalel Smotrich, has criticized the decision of international rating agency Moody’s to lower Israel’s sovereign credit rating for the first time in history. Smotrich argued that the Israeli economy is strong and has the resources to support the war effort and return to rapid economic growth.

He accused Moody’s of making a political move by lowering Israel’s credit rating based on a pessimistic and unfounded worldview. Smotrich also criticized the agency for not recognizing terrorist organizations like Hamas and Hezbollah and for hinting that it would not have lowered the rating if Israel had accepted a proposal to stop hostilities and create a Palestinian state.

Smotrich expressed gratitude to the Ministry of Finance’s auditor general, the chairman of the Bank of Israel, and other Israeli economists for their efforts in working with rating agencies. However, he also made additional attacks on Moody’s by questioning the authority of economists in New York to assess the situation in Israel.

Moody’s report expressed concern about the consequences of ongoing military conflict with Hezbollah on the Lebanese-Israeli border, potential damage to Israeli infrastructure, and weakening public institutions which may lead to a decrease in ratings. The report noted that civil society was strong but had a negative outlook on Israel’s credit rating, implying a possible downgrade in the future.

The downgrade was attributed primarily to full-scale conflict with Hezbollah, which damaged Israeli infrastructure and weakened public institutions. Nevertheless, Moody’s indicated that if the government showed effectiveness in formulating policies that support economic growth and restore security after hostilities ended, it would change its outlook from negative to neutral.

In conclusion, finance minister Smotrich strongly disagrees with Moody’s decision to lower Israel’s sovereign credit rating, arguing that it is politically motivated and lacks basis in reality. Despite this criticism, Smotrich expresses gratitude for those involved in working with rating agencies while continuing his attack on Moody’s authority as an international agency assessing situations beyond its jurisdiction.

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