news

Cailianshe News, August 13 (Editor: Bian Chun)As the ongoing military conflict puts pressure on Israel's public finances, Fitch Ratings, one of the three major international credit rating agencies, downgraded Israel's sovereign debt rating by one level on Monday and maintained its rating outlook at "negative."

According to a statement,Fitch downgraded Israel's rating to A from A+, citing "ongoing war" and geopolitical risks as drivers。

Fitch analysts including Cedric Julien Berry and Jose Mantero wrote:The downgrade "reflects the impact of the ongoing Gaza war, heightened geopolitical risks and military operations on multiple fronts."

“We believe the Gaza conflict is likely to continue until 2025 and there is a risk of spillover to other fronts,” the analysts said.

Fitch said:Losses of lives, significant additional military spending, damage to infrastructure, and continued impairment of economic activity and investment could lead to a deterioration in Israel’s credit metrics.The agency also added that tensions in the Middle East "remain high".

Fitch expects Israel's budget deficit to rise to 7.8% of gross domestic product (GDP) this year from 4.1% in 2023, and expects debt to remain above 70% of GDP in the medium term.

"It is natural that the war and the geopolitical risks it creates lead to a ratings downgrade," Israeli Finance Minister Bezalel Smotrich said in a statement later. "We will continue to support all (funding) needs of the war through a responsible budget, while maintaining the fiscal framework and promoting growth engines."

"It is necessary to act quickly to develop a responsible state budget for 2025 based on rebuilding fiscal reserves through a gradual reduction in the debt-to-GDP ratio," Yali Rothenberg, Israel's finance ministry accountant general, said in response to the downgrade.

Israel announced last week that its deficit widened to 8.1% of GDP in July from 7.7% at the end of June.

In February this year, Moody's downgraded Israel's sovereign credit rating for the first time, lowering its credit rating by one level to A2 with a "negative" outlook.

The health department of the Gaza Strip in Palestine issued a statement on the 12th saying that since the outbreak of a new round of Israeli-Palestinian conflict in October last year, Israel's military operations in the Gaza Strip have killed 39,897 Palestinians and injured another 92,152.

Following the assassinations of Hamas leader Ismail Haniyeh and Lebanon's Hezbollah top military commander Fuad Shoukr, there are concerns that the conflict in Gaza could escalate into a wider war in the Middle East.