Fitch Affirms Israel Credit Rating at A with Negative Outlook
Fitch Ratings affirmed Israel's 'A' credit rating with a negative outlook, warning that recent election results threaten prolonged political instability and fiscal challenges.
Fitch Ratings has affirmed Israel's credit rating at 'A' while maintaining a negative outlook, citing heightened risks of prolonged political instability following the recent election results. Analysts at the agency warned that forming a stable coalition with a 61-seat majority remains uncertain, potentially triggering an era of fragile governments reminiscent of the frequent elections between 2019 and 2022.
According to Fitch, the outgoing coalition lacks a parliamentary majority, making the approval of the 2027 state budget before new elections highly unlikely. Operating without an approved budget would restrict government spending under Israel's fiscal rules. The agency noted historical precedents, recalling that Israel operated under a continuation budget throughout 2020, for nearly ten months in 2021, and for five months in 2023.
Furthermore, Fitch projected that Israel's government debt-to-GDP ratio will continue to rise moderately, serving as a primary factor driving the negative credit outlook.
