International credit rating agency S&P announced that it was upgrading its sovereign rating for Israel to AA-, with a stable outlook, Globes reports.
The move follows a visit by the agency's representatives to Israel in July, a period of a year in which its rating outlook for Israel stood at positive. S&P's new rating is the highest Israel has ever received. Two weeks ago, Moody's updated its rating outlook for Israel from stable to positive.
S&P cited Israel's fiscal discipline and a slightly higher than expected economic growth rate as the main reasons for the upgrade. “Although public debt remains relatively high, we now think that fiscal slippages leading to a significant reversal of the debt path are unlikely. This is based on our belief that, absent global trade shocks, Israel’s economic growth outlook will remain solid and allow the government to accommodate pressures coming from social and infrastructure spending, as well as a potential moderate escalation of security risks.”
Israel has managed to reduce its ratio of debt to GDP from 70% to 60% over the past decade. S&P noted as strength of the Israeli economy its competitiveness, growth, and the fact that Israel is a net lender to the world and not a borrower.
S&P also mentions the high credibility of the Bank of Israel, and its cautious and responsible monetary policy.
As risks to the Israel's creditworthiness, S&P mentions “high exposure to external and domestic security risks."