Considering that so many factors of the Israeli economy have shown growth and the fact that Israel successfully weathered the COVID-19 crisis, analysts said that the economy's credit rating prepared by Fitch was supposed to rise, yet in the end, it remained at A+.
Fitch is considered the smallest of the three credit rating companies which include Standard & Poor and Moody's. The last time it rated the debt of the Israeli economy was at the end of July 2022 and even then it remained unchanged.
When giving this rating, Fitch determined that "an improvement in the credit rating is possible if the trend of reducing the debt-to-product ratio continues over time, combined with the establishment of wise fiscal policies and a decrease in the risks to political stability."
In light of these variables and without the proposal for judicial reform, the credit rating would have gone up. It should be noted that the leading rating company S&P previously raised the rating of the economy to AA- and Fitch was supposed to follow suit.
It's now expected that both Moody's and S&P will leave the credit rating at zero change, but will still be watching developments regarding the judicial reform initiative.
Fitch emphasized in giving the rating that the proposed changes in the legal system are a risk factor. The company explained that these changes may harm the rating of the Israeli government in the index published by the World Bank (WGBI).
If Israel's ranking drops, the credit rating will too. Fitch also noted that in some cases such a reduction resulted in a marked drop of up to one ranking point. The rating company also mentions in the report the hint at harming the central bank's independence that came from members of the Knesset.
Finance Minister Bezalel Smotrich, however, is ignoring any warning signs. In recent media appearances, he said that the Israeli economy is strong and stable and Fitch gave good scores. Israel was threatened a lot, but in the end no harm was done.
He claimed that the rating remained stable and high and Israel received commendable marks.
Fitch has established a non-binding opinion regarding the reform initiative, but they're also waiting to see its results.