Israel's finance minister condemns Moody's downgrade of country's credit rating | Nation and the world

Moody's on Friday downgraded Israel's debt rating, warning that the ongoing war in Gaza and the possibility of war with Hezbollah in the north could have a negative impact on Israel's economy.

This is the first time Moody's has lowered Israel's credit rating, which investors use to gauge the risk of investing in global companies and governments. Moody's downgraded Israel's credit rating from A1 to A2 and said the country's economic outlook was “negative.” Still, Moody's says the A2 rating still carries relatively low risk.

Finance Minister Bezalel Smotrich rejected the decision. The announcement “reflects a lack of confidence in Israel's security and national strength and in the correctness of Israel's path toward its enemies,” he said in a statement from his official residence.

Prime Minister Benjamin Netanyahu said Saturday that Israel's economy is doing well and that “the downgrade is solely due to the fact that we are at war.” He vowed that ratings would rise again once the war was over.

Still, Israeli officials are concerned that Moody's downgrade could cause other major agencies to also downgrade Israel's outlook.

Michelle Strochinsky, an economics professor at Jerusalem's Hebrew University, said it could affect Israel's economy by making it harder for the government to sell bonds and raise money.

“If the war goes on for a long time, there will be an impact, but if it's not too long, the impact will be much smaller,” he said.