Moody’s downgrades Israel’s rating over war in Gaza

Moody’s downgrades Israel’s credit rating to A2 and sets a negative outlook, marking Israel’s first such downgrade

The U.S. ratings agency Moody’s downgraded Israel’s credit rating Friday from A1 to A2 due to Israel’s ongoing war on Gaza, marking the first time the nation has faced such a reduction.

In a statement, Moody’s said it had done so after assessing that “the ongoing military conflict with Hamas, its aftermath and wider consequences materially raise political risk for Israel as well as weaken its executive and legislative institutions and its fiscal strength, for the foreseeable future.”

It was the first time Israel has been downgraded, Bloomberg reported.

Moody’s also lowered its outlook for Israel’s debt to “negative” due to “the risk of an escalation” with the far more powerful Lebanese militant group Hezbollah that operates along its northern border.

Following the attack, S&P Global Ratings lowered Israel’s credit outlook from stable to negative on risks that Israel’s war on Gaza could expand.

Fitch places Israel on negative watch

Fitch, which is the last of the big three U.S. ratings agencies, placed Israel on negative watch over risks from the war.

“The weakened security environment implies higher social risk and indicates weaker executive and legislative institutions than Moody’s previously assessed,” the ratings agency said Friday in the statement explaining its decision.

“At the same time, Israel’s public finances are deteriorating and the previously projected downward trend in the public debt ratio has now reversed,” it continued.

“Moody’s expects that Israel’s debt burden will be materially higher than projected before the conflict,” it added.

What happened

Israel continues its onslaught on the Gaza Strip where at least 27,947 Palestinians have been killed, including 12,000 children and 8,190 women, and 67,459 injured since Oct. 7.

Israel has pounded the Gaza Strip since a cross-border attack by Hamas, which Tel Aviv said killed nearly 1,200 people.

The Israeli offensive has left 85% of Gaza’s population internally displaced amid acute shortages of food, clean water, and medicine, while 60% of the enclave’s infrastructure was damaged or destroyed, according to the United Nations.

Source: Türkiye Today with AFP

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