Galit Altstein
Bloomberg, Aug. 21, 2023
“Fitch’s confidence came with a warning, however, that Israel’s governance indicator scores could be at more risk in case of “a massive change in the way judges are appointed with a very political agenda.”
When Fitch Ratings issued an optimistic report on Israel last week, it defied growing conventional wisdom that the government’s populist agenda is hacking away at the economy while driving capital, companies and talent abroad. Breaking with naysayers at the other major credit assessors, Fitch affirmed Israel’s sovereign rating at A+ and signaled little worry over a planned judicial overhaul that’s unleashed seven months of unprecedented unrest.
In an interview, Cedric Berry, Fitch’s lead analyst on Israel, said he draws comfort from the combination of Israel’s economic resilience and the fractiousness of its politics. What’s more, Prime Minister Benjamin Netanyahu’s government “watered down” its effort to reduce judicial power, he said.
“Even if Israel’s government lasts four years, it’s unlikely that a similar coalition would be formed afterward, so it would take a very strong reform drive to inflict a significant amount of damage,” Berry said. “And we don’t think that’s where the government is headed.”
In addition, he dismissed concerns about a major departure of capital and talent from the high-tech industry, saying any such flight is expected to be limited and not enough to make a big impact.
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