The rating agency S&P Global Ratings on Thursday, April 18, lowered Israel's debt rating from AA- to A+ due to
"the intensification of the confrontation with Iran"
and attached it to an outlook negative, signifying further possible deterioration in the coming months.
“The recent intensification of the confrontation with Iran increases the already high geopolitical risks for Israel
,” the agency statement said.
“We believe that a broader regional conflict will be avoided but the war between Israel and Hamas and the confrontation with Hezbollah appear likely to continue throughout 2024
,” warns S&P Global Ratings.
A forecast deficit of 8% of GDP in 2024
This is the second time that Israel has experienced a downgrade of its long-term debt rating. In February, Moody's also lowered it by one notch due to the conflict with Hamas. The war triggered by an attack by the Palestinian Islamist movement on October 7 against Israeli territory knows no respite.
“We previously thought that military activity would last no more than six months
,” S&P acknowledges.
The agency forecasts a widening of the country's public deficit which will represent 8% of Israeli GDP this year, due to the increase in defense spending. Higher deficits will persist in the medium term and public administration debt will peak at 66% of GDP in 2026, S&P further indicates.
This downgrade of the sovereign debt rating follows
“the geopolitical risks faced by Israel after the first direct attack by Iran in mid-April
,” said the press release, which recalls that this attack took place following the strike attributed to Israel from the Iranian consulate in Damascus.