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Fitch cuts Israel’s credit rating to ‘A’ as Middle East tensions rise

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Published Tue, Aug 13, 2024 · 07:13 AM
    • Fitch maintained Israel’s outlook at “negative” and forecast the country’s debt to “remain on an upward trend beyond 2025” if higher military spending and economic uncertainties continue.
    • Fitch maintained Israel’s outlook at “negative” and forecast the country’s debt to “remain on an upward trend beyond 2025” if higher military spending and economic uncertainties continue. PHOTO: REUTERS

    RATINGS agency Fitch downgraded Israel’s credit rating to “A” from “A+” on Monday, citing worsening geopolitical risks as the war in Gaza drags on.

    Israel’s war on Gaza, triggered by the Islamist group Hamas-led cross-border attack on Oct 7, has cost thousands of lives and unfolded into a humanitarian crisis.

    “In our view, the conflict in Gaza could last well into 2025 and there are risks of it broadening to other fronts,” the ratings agency said in a statement.

    Fears that the conflict in Gaza could turn into a broader Middle East war have escalated after the killing of Hamas leader Ismail Haniyeh in Iran and top Hezbollah military commander Fuad Shukr in Beirut.

    Heightened tensions between Israel and Iran and its allies could imply significant additional military spending, destruction of infrastructure and damage to economic activity and investment, Fitch said.

    The ratings agency expects the Israeli government to permanently increase military spending by close to 1.5 per cent of GDP versus pre-war levels as the country strengthens its border defences.

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    Fitch maintained Israel’s outlook at “negative” and forecast the country’s debt to “remain on an upward trend beyond 2025” if higher military spending and economic uncertainties continue. REUTERS

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