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Moody's Signals Israel Is Far From Credit Rating Upgrade Amid Security and Fiscal Concerns
Moody's maintains Israel's credit rating at Baa, citing strong economic resilience but highlighting security risks, fiscal deficits, and institutional challenges that hinder an upgrade. The agency projects moderate growth and stable but high public debt, with defense spending posing significant fiscal risks.
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What happened
- 01Moody's keeps Israel's credit rating at Baa, lowest among major agencies.
- 02Economic growth projected at 3.7% in 2026 and 5% in 2027, below Bank of Israel forecasts.
- 03Public debt expected to rise to about 70% of GDP with deficits over 4% through 2027.
- 04Institutional strength weakened by political polarization and judicial reform concerns.
- 05Defense spending estimated at 6% of GDP, posing fiscal risks to rating.
- 06Security threats from Iran, Hezbollah, and Hamas remain major credit constraints.
Moody's warns that political polarization and judicial reforms could further weaken institutional strength, while ongoing security threats keep Israel's credit profile fragile.
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