Israel’s recent downgrade by Moody’s has sparked controversy, with Finance Ministry officials claiming the agency was too conservative in their assessment. Despite the downgrade dropping Israel’s rating to its lowest ever, officials argue that the country’s ability to repay foreign debt remains strong. They point to Israel’s surplus in the current account for the past 20 years and the high reserve of foreign currency held by the Bank of Israel.
While Moody’s predicts a slow economic recovery and increasing debt-to-GDP ratio, officials believe this scenario is exaggerated. They highlight the importance of responsible budgeting and improved security for a potential rapid rebound in the economy. However, uncertainties persist, with Professor Dan Ben-David emphasizing the unpredictability of Israel’s economic situation.
With Bank of Israel Governor Professor Amir Yaron stressing the significance of Moody’s rating, it is clear that the agency’s assessment will have a significant impact on Israel’s economic outlook. Despite differing views, all stakeholders agree on the importance of addressing the challenges and risks facing the Israeli economy.
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