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Fitch Ratings keeping tabs on Israeli judicial reform effort

"Fitch knows that Israel has a strong economy, but they want to see what will happen with the judicial issue," said an official involved in the matter. The agency is expected to announce a decision on the matter in August.

Fitch Ratings headquarters in New York, Feb. 1, 2019. Source: Wikimedia Commons.
Fitch Ratings headquarters in New York, Feb. 1, 2019. Source: Wikimedia Commons.

The American credit rating agency Fitch Ratings is keeping a close watch on the judicial reform developments in Israel, Israel Hayom has learned. 

The company has held a round of meetings with Israeli economic officials, with its economist—who visited Israel last week—expected to publish a decision regarding the country in early August. 

According to senior Israeli economic officials who met with members of the Fitch delegation, the company is keeping tabs on developments in Israel, has spoken with many officials and saw the anti-reform protests. 

“Fitch knows that Israel has a strong economy, but they want to see what will happen with the judicial issue. They are aware of the impact so far of the legislative process on high-tech investments and activity in general,” one of the officials said. 

According to the source, for Fitch Ratings, “The non-extension of the term of [Bank of Israel] Governor [Amir Yaron] would be a worry. But they are aware that it could take a few months until Netanyahu decides on this. As we know, the prime minister only decides at the last minute.”

In May, Fitch Ratings issued a special update regarding Israel, when it complimented its economic strength but expressed concern that the judicial reform effort could hurt Israel’s A+ sovereign credit rating.

“Israel continues to face high levels of internal social and political tension, and the advancement of certain policies favored by the governing coalition could aggravate these strains and influence the sovereign’s rating,” Fitch said in a report released at the time titled “Strong Economic Growth Key to Israel’s Debt Trajectory.”

Similar questions are likely to be soon asked by the economists of the S&P ratings company as well, which in mid-May affirmed Israel’s Aa-/A-1+ credit rating and stable outlook. 

The company’s announcement said that its prediction was based on the assumption that an agreement would be reached on the judicial reform, allowing tensions to ease.

Originally published by Israel Hayom.

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