Among the reasons cited in the report - the lack of budget for 2021, the political instability and the growing deficit, which raise the concerns of credit rating agencies • The corona crisis has affected the government debt more than the private • For full details
Photography:
Oren Ben Hakon
Israel's credit rating may be at risk, according to a new Bank of Israel report. This is the financial stability report for the second half of 2020, according to which Israel's public debt level in 2020 and forecasts for 2021 are not exceptional compared to OECD countries. , But Israel is at the top of the countries' distribution in terms of the deficit rate.
"The high-tech sector, natural gas reserves, monetary flexibility, a high level of household savings and the potential for growth in the medium term are Israel's strengths," the Bank notes.
However, credit rating agencies note in their reviews that the lack of a budget for 2021 and continued reliance on a continuation budget from 2019, the degree of political stability and the way the government will deal with the structural deficit after the crisis affect Israel's debt risk.
The report also shows that in contrast to the large impact of the crisis on the volume of government debt, the effects on total private debt were not large, but its composition and the risk inherent in it were greatly affected. On which the Bank of Israel trusts, it has exercised significant tools in dealing with the crisis, and in addition to purchases of foreign currency and government bonds, the Bank of Israel has, for the first time, acquired corporate bonds - a move designed to revive the non-bank credit market. The market.
According to the Bank of Israel, these and other tools have enabled the capital market to be stable in relation to the financial asset indices relative to the many risk factors, and to support economic activity in the economy even under conditions of high uncertainty.
The bank notes that "allowing commercial banks to defer loan payments to the business sector and households in a simple and quick procedure prevented entering into many debt settlements amid halting business activity in many industries and high unemployment rates, especially during quarantine periods."