Fitch Affirms Israel's 'A' Rating, Cites Risks Amid Negative Outlook

While the 'A' rating reflects high borrower creditworthiness, the negative outlook warns of a potential future downgrade if macroeconomic conditions deteriorate. Analysts from Fitch warned that a downgrade could increase borrowing costs for the state, which could eventually impact citizens through higher loan rates, reduced public services, and budget cuts in civilian programs.

According to NEWSru Israel, Fitch analysts also highlighted risks of prolonged political instability following elections, noting that current polling data does not indicate a clear majority for either political bloc. This political deadlock, combined with defense spending, could hinder deficit-reduction efforts. The agency projects Israel's national debt to rise from 68.5% of GDP in 2025 to 72.1% by 2028, significantly higher than the projected median of below 58% for similarly rated countries.

Despite these significant financial strains, Fitch acknowledged the strengths of the Israeli economy, describing it as diversified and resilient. The rating is supported by Israel's advanced high-tech sector, strong external financial positions, and solid foreign economic balance.