09.29.12, 07:35–The Standard & Poor’s credit rating agency believes that the significant cut of some NIS 14 billion ($3.5 billion) in Israel’s State Budget will be implemented regardless of upcoming elections.
The agency’s economists, who visited Israel in the summer and met with the finance minister and Bank of Israel governor, affirmed the country’s A+ rating on Friday, noting that “the stable outlook reflects our view that there is sufficient political will to prevent a sizable increase in the government’s debt burden, and that major security risks will be contained.”
In September 2011, S&P raised Israel’s foreign currency sovereign credit ratings to A+ and its local currency ratings to AA-. Then, as now, the main factors for the decision are the governmental policy over the State Budget and public debt and natural gas discoveries in the Mediterranean Sea.
“We forecast that by the middle of the decade, domestic natural gas production should contribute to improved external and fiscal balances,” the agency’s economists noted in their report.
They also believe that despite a weak global economic environment and a temporary slowdown in 2012 and 2013, Israel’s gross government debt burden should modestly decline over the forecast horizon – to 71% of GDP by 2015 (compared to 76% today)…Read More>>