On video: The government approved the state budget for 2024 15.01.2024/Video (upload): Omer Miron / L.A.M., Sound: Ben Peretz / L.A.M.
Israeli investors are not moved by the downgrading of Israel's credit rating by Moody's, and the Israeli stock market reacts this morning (Sunday) with relatively moderate price decreases (until this writing) with a decrease of about 04% in the cell index 35 and about 0.5% in the cell index 125.
The expectation of the local capital players is that the stock market will even close in a positive trend.
Israeli eyes that looked at the report of the rating agency to downgrade Israel's credit rating from Aaa to A2, however, could not remain indifferent to the reasons presented in it, that economics was not the main basis, and some of them even contradict each other.
The essence of the report is the expression A complete lack of trust in the political actors in Israel, along with full trust in the Israeli financial and monetary systems, which only strengthens the Israeli rebellion to the decision to lower the rating.
The report, which concludes the review that the rating agency began as early as last October 19, emphasizes that the main reason for the downgrade is Moody's assessment that the war that Israel is waging against the Hamas organization in Gaza will have wider consequences when it ends.
The report reflects a complete lack of trust in the political actors in Israel/Flash 90, Chaim Goldberg
Reaching this conclusion is also possible without extensive financial education, which continues with Moody's score that the Israeli business environment was damaged and deteriorated as a result of the war.
But the agency did not specify what the deterioration was, how the war deepened the damage to the business sector in Israel, in which areas, and what the depth of the damage was.
Moody's also stated that there is a possibility, and emphasis on the word possibility, of expanding the deficit, and that the main consequences are in the political risks that may weaken the legislative and legal institutions in the future.
In other words, the main concerns of Moody's are not rooted in its economic situation today or any other day in the future, which it can examine or present in numerical parameters or put in some formula, but in what may, and here again it is worth emphasizing - may, lead to investment risk in Israel following a political situation that the agency defines as such Which may, and we will emphasize again - may, weaken the democratic institutions of her government.
Moody's also notes that the security environment in which Israel finds itself increases the economic risk and that the lack of any agreement that would strengthen Israel's security adds to it.
But Israel's environment was and remains as it was, and so is the lack of a political agreement with, let's mention, a terrorist organization.
The only thing that has changed in its Middle Eastern environment is the very fact that it flared up, once again, with the implementation of a large-scale terrorist plan designed to harm Israel and its citizens, and lead to its destruction "from the river to the sea".
The rating agency also states that it estimates that Israel's debt burden will be higher, but does not state which factors that were not taken into account that would cause it to increase and by how much.
What is certain is that now, when Israel's rating is downgraded, the debt burden will indeed be higher.
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Governor of the Bank of Israel Prof. Amir Yaron.
Full trust in the financial and monetary systems/image processing, Flash 90; none
Moody's also points positively to the Bank of Israel and Israel's economic strength and resilience, along with its ability to quickly stabilize its financial markets.
She also points positively to the Bank of Israel, the banking sector and the liquidity of the government, but in her view these were weakened following the war and were even weaker before due to the public controversy surrounding the legal reform.
However, once again, the agency does not present in the report the expected numerical weakening and how it harms Israel's economic capacity beyond a general statement that the very war weakens them.
On the contrary, Moody's even leaves the ceiling of the rating of the local currency and the rating of the foreign currency held by Israel on Aaa, with the latter accounting for approximately 39% of Israel's gross national product.
The agency also notes that even after the expected deficit, Israel's debt-to-GDP ratio will stand at approximately 67% by 2025, which is an increase of approximately 7% compared to 60% in 2022%. That is, Israel will still be more than capable of meeting its full obligations, and has a significantly better debt-to-GDP ratio than developed countries that are richer than it.
In addition, the agency notes that the 2024 budget even contains a number of supporting moves, including a taxation policy that will help Israel cover parts of the deficit, such as raising The VAT at 1%, which will add about 0.35% of the national product every year.
It should be noted that the Moody's report has no direct effect on the capital ratios of the Israeli banks, since no local bank uses Moody's but mainly the S&P rating.
Analysts don't like uncertainty/ShutterStock, Dariusz Gryczka
Micha Goldberg, banking analyst at the Psagot Investment House, for example, wrote that "only if Moody's downgrade leads to S&P's downgrade is there likely to be an impact on the local banks. In our estimation, it is indeed appropriate to assume that S&P will also downgrade Israel's credit rating in the coming year." .
Alongside all of this, it should be noted that whether the rating agencies lean in a political left or right direction, analysts do not like uncertainty, which only increases in times of war, and certainly when no stable horizon is given, such as the political settlement the Americans are pushing for, which allows the parties to receive the desired certainty economic.
The Moody's report is indeed portrayed in the eyes of political parties as more of an American reprimand intended to pressure Israel to accept its position on the Palestinian issue, than an investigative report on the Israeli economy.
But mainly the report expresses a lack of trust in the current political actors, and even points to the political explosiveness that exists in Israel as one of the clouds clouding its economy.
In this sense, it is possible that Moody's shot directly into the thoughts of the Israeli public, who are now crying out even from the graveyards to replace the entire divisive leadership The edges of Israeli politics in the unifying one.
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The Stock Exchange in Tel Aviv