S&P Global Ratings downgrades the Hebrew state’s debt rating

The rating agency S&P Global Ratings lowered Israel’s debt rating from AA- to A+ on Thursday April 18 due to “the intensification of the confrontation with Iran” and gave it a negative outlook, signifying a possible further deterioration in the coming months. “The recent intensification of the confrontation with Iran increases the already high geopolitical risks for Israel”said the agency’s press release. “We believe that a wider regional conflict will be avoided but the war between Israel and Hamas and the confrontation with Hezbollah appear likely to continue throughout 2024”warns S&P Global Ratings.

A forecast deficit of 8% of GDP in 2024

This is the second time that Israel has experienced a downgrade of its long-term debt rating. In February, Moody’s also lowered it by one notch due to the conflict with Hamas. The war triggered by an attack by the Palestinian Islamist movement on October 7 against Israeli territory knows no respite. “We previously thought that the military activity would last no more than six months”recognizes S&P.

The agency forecasts a widening of the country’s public deficit which will represent 8% of Israeli GDP this year, due to the increase in defense spending. Higher deficits will persist in the medium term and public administration debt will peak at 66% of GDP in 2026, S&P further indicates.

This downgrading of the sovereign debt rating follows “the geopolitical risks facing Israel after the first direct attack by Iran in mid-April”says the press release, which recalls that this attack took place following the strike attributed to Israel on the Iranian consulate in Damascus.