newsIsrael at War

Smotrich slams Moody’s downgrade: ‘A political manifesto’

Israel's finance minister said that Moody's hadn't included serious economic arguments in its analysis, instead basing it on a "pessimistic geopolitical worldview."

Minister of Finance Bezalel Smotrich speaks during a press conference at the Ministry of Finance in Jerusalem on Aug. 9, 2023. Photo by Chaim Goldberg/Flash90.
Minister of Finance Bezalel Smotrich speaks during a press conference at the Ministry of Finance in Jerusalem on Aug. 9, 2023. Photo by Chaim Goldberg/Flash90.

Israeli Finance Minister Bezalel Smotrich sharply criticized Moody’s Investor’s Service on Saturday night after the agency downgraded Israel’s credit rating a day earlier. It was Israel’s first-ever sovereign downgrade.

Smotrich called the agency’s announcement “a political manifesto that is based on a pessimistic and unfounded geopolitical worldview.”

“The Israeli economy is strong by all measures: In its ability to support the entire war effort, on the front and in the rear, until victory will be achieved with the help of God and the valor of the fighters, and to return to a path of accelerated growth,” Smotrich said in a statement.

Moody’s, one of the big three rating agencies, along with S&P Global Ratings and Fitch Ratings, lowered Israel’s rating from A1 to A2.

Moody’s rating scale ranges from D to AAA. A2 is still strong—the agency’s sixth-highest investment grade. (Bloomberg notes it puts Israel on par with Poland and Chile). However, Moody’s also said Israel’s outlook was negative.

“[T]he ongoing military conflict with Hamas, its aftermath and wider consequences materially raise political risk for Israel as well as weaken its executive and legislative institutions and its fiscal strength, for the foreseeable future,” the credit ratings agency said.

Smotrich said that Moody’s analysis didn’t include serious economic arguments and was based on a pessimistic geopolitical worldview, reflecting a lack of confidence in Israel’s security apparatus, national resilience and the righteousness of Israel’s war against its enemies.

“Moody’s is not even able to define Hamas and Hezbollah as terrorist organizations in its announcement, and implies that it would have avoided the downgrade if only Israel had accepted the suicide plan offered to it by elements in the international community to stop the war and establish an Arab terrorist state in Gaza and Judea and Samaria,” Smotrich noted.

S&P is also reviewing Israel’s credit rating and plans an update to the country’s credit rating in May.

S&P analysts say they could “lower the ratings on Israel if the conflict widens materially, increasing the security and geopolitical risks that Israel faces.”

It added: “We could also lower the ratings in the next 12-24 months if the impact of the conflict on Israel’s economic growth, fiscal position and balance of payments proves more significant than we currently project.”

S&P, Fitch and Moody’s all put Israel’s credit score on a negative watch in October following the massacre earlier that month, in which 1,200 Israelis were killed and some 240 taken hostage.

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