Fitch Ratings on Friday affirmed Israel's long-term foreign-currency issuer default rating at 'A' with a negative outlook.
The agency stated that the rating reflects Israel’s diversified and resilient economy, high-value-added sectors, and strong external finances. At the same time, the negative outlook indicates risks related to ongoing geopolitical developments and their potential impact on public finances and economic performance.
Fitch noted that Israel’s economy has demonstrated resilience despite recent challenges, supported by strong fundamentals and policy flexibility. However, the report highlighted that uncertainty surrounding security conditions could weigh on growth, investment, and fiscal metrics.
According to the report, government debt is expected to remain elevated compared to pre-crisis levels, reflecting increased spending needs. Fitch also pointed to pressures on the budget stemming from defense expenditures and other related costs.
The agency indicated that Israel’s fiscal deficit is likely to remain wider than in previous years, with gradual consolidation dependent on policy decisions and economic developments.
Fitch further stated that Israel maintains strong access to financing, supported by a deep domestic capital market and a record of prudent debt management.
The report added that external balances remain a key credit strength, with a history of current account surpluses and substantial foreign exchange reserves.
Fitch said that the rating could be downgraded if there is a sustained deterioration in public finances, weaker economic growth, or a prolonged escalation in geopolitical risks. Conversely, the outlook could be stabilized if fiscal metrics improve and risks subside.
The agency emphasized that future rating actions will depend on developments in the security situation, fiscal performance, and broader economic conditions.