Moody’s became the first major rating agency to downgrade Israel’s creditworthiness, citing the prolonged war with Hamas and the damage it is causing to the country’s finances.
Israel currently has a credit rating of A2 (previously A1). The agency noted that the military conflict with Hamas and its consequences would increase “political risk for Israel and weaken its executive and legislative institutions and financial strength for the foreseeable future.”
The outlook for Israel’s debt was also assessed as “negative.” The “risk of escalation” of the conflict between Israel and Hezbollah militias in Lebanon played a decisive role in the decision, the agency said.
Moody’s expects Israel’s military spending to double by the end of this year compared to 2022. This means more debt to finance more spending.
