\u201cGeopolitical risks remain high and a constraint on the rating\u2026with tensions occasionally flaring up, possibly resulting in ceasefires breaking and even military conflicts re-emerging,\u201d Moody\u2019s cautioned. \u201cThis translates into a long-lasting negative impact on the government\u2019s finances and the economy.\u201d<\/p>\n
\t Despite the lingering geopolitical risks, Moody\u2019s expressed confidence that \u201cdebt will remain relatively affordable and that the government will have no problems meeting its funding needs.\u201d<\/p>\n Moody\u2019s said it expects Israel\u2019s government debt to stabilize around 68 percent of GDP, compared with a decline to 50% of GDP projected in assessments before the outbreak of the Hamas war on October 7, 2023.<\/p>\n Commenting on the Moody\u2019s report, outgoing Accountant General Yali Rothenberg said that \u201clooking ahead, consistent fiscal discipline and continued convergence measures are required to ensure a downward trend in the debt-to-GDP ratio over time.\u201d<\/p>\n In 2026, Moody\u2019s projects economic growth of 5%, driven by a \u201cstrong post-war rebound.\u201d \u00a0For 2027, the credit rating agency forecasts GDP growth of around 3% to 3.5%.<\/p>\n Moody\u2019s change in Israel\u2019s credit rating outlook follows a similar move by global credit rating agency Standard & Poor\u2019s, which lifted<\/a> Israel\u2019s credit rating outlook to stable from negative in November, citing prospects of \u201cmilitary de-escalation\u201d in Gaza and the wider region following the ceasefire agreement with Hamas. S&P, which downgraded Israel\u2019s credit rating twice in 2024, kept the country\u2019s A\/A-1 credit rating in place.<\/p>\n
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\n\t\tSmoke rises following an Israeli airstrike west of Khan Younis in the southern Gaza Strip, January 31, 2026. (Abed Rahim Khatib\/Flash90)<\/p>\n
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