Israel-Palestine conflict: Israel's credit rating unlikely to be downgraded despite war with Hamas
Exciting news! Mint is now on WhatsApp Channels. Subscribe today by clicking the link and stay updated with the latest financial insights! Click here Moody’s Investors Service postponed a planned review of Israel’s rating on Friday, saying it continued to evaluate the wider credit risk of recent hostilities. The resilience of Israeli debt issuers is at stake if a conflict stretches on, the ratings agency said in a separate note earlier last week.
The Gaza conflict will bring on an increase in government expenditures, a decrease in tax collection and a growth in government deficit, the official said. Still, Israel does not anticipate any impact on its financing capabilities because it has a strong fiscal cushion. Israeli Central Bank Governor, Amir Yaron, also expressed confidence in the economy’s resilience.
“Every war has a considerable economic dimension that includes the impact to the financial markets, and with so many reserve soldiers at the front-lines and civilians in shelters, there is an effect on real economy, Yaron said in a video address to the G-30 forum in Marrakech. “However, with the appropriate budget adjustments, that I believe are manageable , there should be no major changes to Israel’s fundamental fiscal position," he added. Israel has vowed to wipe out Hamas in response to the assault that killed 1,300 people in southern Israel.
It’s preparing for a ground offensive against the group in the Gaza Strip, fueling speculation of a prolonged war. There are fears a second front could open in the north with Hezbollah, the Lebanon-based militia. The economic cost of the conflict would probably run to at least 27 billion shekels ($6.8 billion), according to Bank Hapoalim in Tel Aviv.
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