Moody’s had granted Israel a long period of grace. The day after the attack carried out by Hamas on October 7, 2023, the international rating agency announced that it was reviewing the country’s rating, with a view to a downward adjustment. She gave the Jewish state four months to raise funds and revise its 2023 and 2024 budgets while mobilizing more than 360,000 reservists and deploying its infantry in Gaza. In the meantime, the government has also buried a draconian justice reform project, which had alarmed the rating agencies throughout 2023.
However, Moody’s did indeed end up, on Friday February 9, after lengthy consultations, by lowering the country’s credit rating from A1 to A2, adding a negative outlook. The agency thus indicates its lack of confidence in Israel’s ability to regain its own stability and to reassure buyers of its debt. Certainly, it recognizes the capacity of the Israeli economy and institutions to weather the conflict, as they have done in the past. But October 7, 2023 revealed, according to the agency, Israel’s security situation “less established” than the army previously provided. Above all, the agency underlines deep uncertainties, maintained by the government, as to the possibility of an extension of the conflict in Lebanon, that of a ceasefire in Gaza or the post-war in the enclave.
“There is currently no agreement to sustainably end hostilities, and no agreement on a longer-term plan that would fully restore and possibly strengthen Israeli security.”writes the agency, in a cold and technical observation, but politically incendiary in Israel.
Netanyahu’s ambiguity
Such a downgrade by a rating agency is a first in the history of the country which, since the 1990s, has continued to improve its position on this scale, all agencies combined. Friday February 9, the Israeli Finance Minister, Bezalel Smotrich (extreme religious right), denounced the Moody’s text as “a political manifesto”. “We do not draw our national, security, social and economic strength from the way the world judges us, but from a deep belief in the rightness of our path, which is based on a glorious past of several thousand years and on a commitment to an even more glorious future”, he assured, with messianic accents. On the eve of taking office, in December 2022, this minister promised to lead Israel on a third path, neither capitalist nor communist, but dictated by the Bible.
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