Fitch Maintains Israel’s A+ Credit Rating; Outlook ‘Stable,’ Despite Judicial Reform

The Fitch Ratings agency announced Monday that Israel’s credit rating remains at A+ and the outlook for the country’s economy is “stable,” noting that the country’s judicial reforms are not likely to have a negative impact on skills or investment.

Fitch, which recently downgraded the U.S. from AAA to AA+ because of debt and declining governance, explained why it would not downgrade Israel (original emphasis):

Judicial Changes Progress: The government’s initial judicial overhaul package has been watered down but remains highly controversial and faces strong civil society and political opposition. Parliament has already passed legislation that stops the supreme court from striking down legislation on the basis of ‘reasonableness’. The government also wants to change the process for appointments to the committee that selects judges, but it has indicated it may no longer seek to give an automatic majority in the appointment committee to the ruling coalition, and has dropped an initiative that would allow parliament to override Supreme Court decisions against legislation.

Impact Uncertain: Fitch believes the changes may have a negative impact on Israel’s credit metrics if the weakening of institutional checks leads to worse policy outcomes or sustained negative investor sentiment or weakens governance indicators. Some countries that have passed major measures reducing institutional checks and balances have seen a significant weakening of World Bank governance indicators (WBGI), the variable with the highest weight in Fitch’s Sovereign Rating Model (SRM). Implications for Israel’s WBGIs are unclear. Fitch considers the current measures are unlikely to trigger a material exodus of talent and capital in the high-tech sector.

Prime Minister Benjamin Netanyahu and Minister of Finance Bezalel Smotrich said Monday that Fitch’s announcement had affirmed that the country’s economy was strong, and that it defied predictions by the political opposition that judicial reform would harm the country.

Indeed, while many global credit ratings agencies had downgraded the “outlook” for the country during the spring and summer debates over judicial reform, none had actually change the country’s overall credit rating.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of the new biography, Rhoda: ‘Comrade Kadalie, You Are Out of Order’. He is also the author of the recent e-book, Neither Free nor Fair: The 2020 U.S. Presidential Election. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.