09.04.12, 14:02–Israel’s political instability and corruption stand out as important weaknesses relative to rating peers in the A rating range and could “eventually jeopardize” the country’s high institutional strength assessment, the Moody’s rating agency states in its annual credit report on the Jewish state released Monday.

Moody’s Investors Service says that Israel’s A1 government bond rating and stable outlook are underpinned by the country’s high economic, institutional and government financial strength, but the rating is constrained by significant social and political challenges, which lead to moderate susceptibility to event risk.

Moody’s ratings affect investors’ decisions to invest in different countries and financial bodies’ decisions to issue loans according to the countries’ ranking.

Alongside the compliments, the company warns that Israel’s high rating is constrained by significant social and political challenges, which lead to moderate susceptibility to event risk.

Moody’s criticizes Israel’s volatile domestic politics and the recurring upheavals which have delayed fiscal corrections that would have kept the budget deficit on target the last two years.

The report suggests that the government’s commitment to fiscal discipline is waning as growth has slowed, and expresses its hope that the deficit will be narrowed this year and next year.

At the same time, the report praises Israel’s high economic strength, which is supported by its relatively high GDP per capita and its economic resilience, which has been illustrated in recent years during frequent economic and political shocks.

However, the report notes, this resilience is being challenged once again by the ongoing euro zone debt crisis and the concurrent slowdown in the global economy…Read More>>

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