Israel gets highest-ever credit rating from S&P

Israel joined an exclusive club of nations on Friday when the Standard & Poor’s credit agency upgraded its sovereign credit rating from A+ to AA-.

The upgrade in the S&P rating grade, which gauges the ability of governments to meet their financial obligations in full and on time, joins a similar rating given by Moody’s last month.

“These decisions reflect the strength of the Israeli economy and the correct and responsible economic policy that we are leading on behalf of Israel’s citizens,” Prime Minister Benjamin Netanyahu said Saturday night.

Finance Minister Moshe Kahlon said the credit rating upgrade will save the country “billions of shekels” that will be passed on to the Health, Education and Welfare ministries.

The AA- rating from S&P is the highest rating Israel has ever received from the credit agency. The highest rating is AAA.

At the same time, however, the agency lowered the country’s economic outlook from “positive” to “stable.”

The agency explained its AArating saying that although public debt remains relatively high, “we now think that fiscal slippages leading to a significant reversal of the debt path are unlikely. This is based on our belief that, absent global trade shocks, Israel’s economic growth outlook will remain solid and allow the government to accommodate pressures coming from social and infrastructure spending, as well as a potential moderate escalation of security risks.

“Israel has demonstrated

sound economic performance since the global financial crisis, with a current GDP of about $140 billion (or 50%) larger than in 2010, the current account in a sustainable surplus, and unemployment at historical lows,” the agency noted.

The agency forecast that the economy would grow at a rate of 3.3% until 2021. It also pointed out that despite domestic political volatility, the coalition approved a two-year budget for 2017-2018 and also the 2019 budget.