JERUSALEM, Feb. 10 (Xinhua) -- Moody's Investors Service on Friday night downgraded the Israeli government's credit ratings for the first time ever, according to Israel's state-owned Kan TV news.
Moody's lowered Israel's credit ratings to A2 from A1 with a "negative' outlook, downgraded from 'stable."
On Oct. 19, 12 days after the outbreak of the Israel-Hamas conflict, Moody's placed Israel's A1 credit ratings on review for downgrade, citing the "unexpected and violent conflict."
According to the agency, the main driver for the rating shift is the assessment that the ongoing conflict and its consequences materially raise political risk for Israel, even if fighting pauses.
It added that this also weakens its executive and legislative institutions along with its fiscal strength.
Moody's further explained that Israel's public finances are deteriorating, and the previously projected downward trend in the public debt ratio has now reversed.
The A2 rating considers the Israeli government's long-standing economic, civil society and judiciary strengths, with the Supreme Court canceling the government's attempt to restrict judicial oversight. These strengths, however, are moderated by the fiscal and debt metrics, the authors noted.
Israeli Prime Minister Benjamin Netanyahu responded that "Israel's economy is solid. The downgrade is not related to the economy, but it is entirely because we are at war. The rating will go back up as soon as we win the war, and we will win." ■
