Moody’s upgrade seen signaling higher ratings for Israel

Moody’s upgraded its outlook for its international market rating for Israel yesterday, from “stable” to “positive.” The rating will apply to both external and domestic debt. Sources at the Ministry of Finance believe the latest rating is the just the start of a review following which all the rating companies covering Israel will upgrade their ratings outlooks. The development was predicted by Governor of the Bank of Israel Prof. Stanley Fischer several months ago, when he said that Israel’s credit rating would improve following the general election.

Responding to the announcement, Minister of Finance Abraham Hirchson said, “This is an excellent commendation for both the government’s economic policy and the economy in general. It represents a vote of confidence in the new government and its ability to lead the economy forward to further economic and dipomatic successes.”

Hirchson added that further improvements in Israel’s rating could be in the offing, provided that fiscal discipline was maintained. “Maintaining a clear and consistent economic policy that places the State of Israel in the frontline of the world’s growing, open, and competitive economies could lead to further improvements in ratings from Moody’s and the other rating companies. Our job is to preserve and continue the trend that creates satisfaction on global markets about the Israeli economy’s progress and stability, promotes foreign investment, and creates the requisite economic leverage for growth and employment.”

Ministry of Finance accountant general Yaron Zalika said that the upgrading was the first step towards raising Israel’s credit rating to A1 (a grading that is parallel to A+), which would be its highest ever. He added that a rating upgrade was of key significance for Israel and would lead, among other things, to a reduction in the costs incurred by Israel when raising finance.

Published by Globes [online], Israel business news - www.globes.co.il - on May 11, 2006

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