Finance Minister Bezalel Smotrich has branded the unprecedented decision by global rating agency Moody’s to downgrade Israel’s sovereign credit rating as politically motivated.
In a formal statement, Smotrich asserted that the Israeli economy is robust on all fronts and has the necessary resources to fund the war efforts, both on the battlefront and the homefront, until victory is achieved. This victory, according to Smotrich, will be realized through divine intervention and the bravery of the soldiers, and will allow for a return to a trajectory of swift economic growth.
Smotrich went on to argue that Moody’s decision lacks substantial economic reasoning and is merely a political manifesto. He suggested it is based on a pessimistic and unfounded worldview that questions the sustainability and viability of Israel. It also appears to express doubt about the correctness of Israel’s approach to combating its enemies, according to Smotrich.
The Finance Minister underscored that the agency does not even categorize Hamas and Hezbollah as terrorist organizations. He suggested that Moody’s would not have downgraded the rating if Israel had agreed to the self-destructive proposal put forward by the international community to halt hostilities and establish an Arab state of terror in Gaza, Judea and Samaria.
In his statement, Smotrich stressed that Israel’s national, social, economic, and self-defense strength does not come from global perception, but from a profound belief in the righteousness of their path, grounded in a history spanning thousands of years. He added that Israel is committed to securing an even more illustrious future. He assured that the statement from Moody’s will not impact this belief or weaken them in their fight for independence and sovereignty in their homeland.
Concluding his statement, Smotrich thanked the auditor general of the Ministry of Finance, the chairman of the Bank of Israel, and other Israeli economists for their efforts in liaising with the rating agencies.
In a subsequent appearance on the ITV Channel 12 program “Meet the Press,” Smotrich launched further criticisms at the agency. He scorned the notion that “5-6 economists are sitting in New York and handing out assessments of why we are not creating a Palestinian state or declaring a truce.”
It should be noted that on the evening of Friday, February 9, Moody’s released a new projection for the growth of the Israeli economy amidst the ongoing War of Iron Swords, now in its fifth month. The credit rating of Israel was reduced to A2 (from A1) with a negative outlook upheld, suggesting a further downgrade could occur in the near term.
Moody’s report highlights concerns over the aftermath of the war in Gaza, military escalation on the Lebanese-Israeli border, and the instability of the current Israeli government. However, it also acknowledges the strength of civil society.
The report underscores that the agency currently does not foresee a scenario for an upgrade in the rating. However, the outlook could be revised to neutral if, post-hostilities, the government demonstrates its ability to formulate policies that bolster economic growth and implement measures to restore security by effectively prioritizing.
The downgrade is likely to stem from an escalation of the situation on the northern border into a full-scale conflict with Hezbollah. This conflict could cause significant damage to Israeli infrastructure and hinder economic recovery. Additionally, a weakening of public institutions could also contribute to a decrease in ratings.