April 26, 2017
Credit rating agency Fitch today confirmed Israel’s A+ credit rating, with a stable outlook. According to Fitch, Israel’s credit rating balances strong external accounts, institutional soundness, and solid macroeconomic performance against a ratio of government debt to GDP that is still higher than in reference countries, and against political and security risks.
The announcement published by Fitch shows that Israel’s external accounts remained strong in 2016. Israel has had a current accounts surplus every year since 2003, and the Bank of Israel’s foreign currency reserves continued their upward path. Fitch expects Israel’s status as a net lender to persist.
Fitch also takes note of the contribution of the natural gas sector to growth in Israel, writing that further development of the gas sector will provide additional support for Israel’s external balance. The rating agency believes that starting in 2013, production of gas from the Tamar off-shore gas field has reduced Israel’s need to import natural gas. The government approved a revised regulatory framework for the gas industry in July 2016, thereby giving a green light for continued development of the Leviathan gas field, where production is slated to begin in 2020.
Fitch’s economists state in the report that Israel’s public financing is still a weak point in comparison with A-rated countries. The ratio of government debt to GDP continued to decline in 2016, reaching 62.2%, but this is still higher than the median for the reference countries. The government deficit was relatively small in 2015-2016, because strong private consumption and the housing market contributed to higher-than-projected tax revenues.