The international credit rating company Fitch announced today that it has reaffirmed that the credit rating of the State of Israel is A +. Fitch also gave Israel a stable forecast.
In its announcement, Fitch emphasized Israel’s strong external accounts and that the country has a strong institutional structure. According to the company, the main limitations on the credit rating are geopolitical risks and a relatively high debt burden.
Fitch noted that Israel’s rapid recovery was mainly due to the high-tech industry as well as the country’s early vaccination campaign. Fitch predicts expects that growth in Israel’s GDP will reach up to 5.1% in 2021 and 5.7% in 2022. These rates are high when compared to the reference countries.
Fitch estimates that Israel’s budget deficit will be about 7% of GDP for 2021, compared to 11.6% last year. The company expects that towards the end of the year the state budget for the years 2021-2022 will be approved, and the debt-to-GDP ratio for Israel will stabilize starting in 2022. Fitch also predicts that Israel’s budget deficit will gradually decrease in the coming years.
Fitch stated that it would be possible to see an improvement in Israel’s credit rating should the trend of reducing the debt-to-GDP ratio resumes and continues over time. Also if there should be a permanent reduction in geopolitical risks.
Israel Minister of Finance, Avigdor Lieberman commented, “The rating company recognizes the growth potential of the Israeli economy, especially in this complex period of the Corona crisis.”