International financial services and credit rating agency Standard & Poor's reaffirmed on Friday Israel's global credit ratings and economic outlook, giving it an A+ score.
The agency further said that the continued reduction of the debt-to-gross domestic product ratio and decreased geopolitical risks may support a higher credit rating for Israel in the future. According to S&P economists, Israel's credit rating could have been higher, potentially reaching the AA level.
The highest credit rating S&P awards is AAA.
The Bank of Israel predicted the economy would grow by 3.4% this year and by 3.5% in 2019. S&P offered a more conservative assessment, saying the Israeli economy is likely to grow by 3.1% a year between 2018 and 2021 as a result of an increase in private consumption, corporate investments and the strong performance of the services sector, which enjoys monetary flexibility.
S&P's report noted that the growth forecast defeats Israel's own remarkable economic performance since the onset of the global financial crisis in 2008.
Finance Minister Moshe Kahlon welcomed the decision, saying, "Israel ended 2017 as one of the strongest and leading economies in the world with excellent macro data. Unemployment is at its lowest rate in 40 years, the debt-to-GDP ratio has dropped to an all-time low and the deficit is much lower than planned."
S&P's decision is "another vote of confidence by one of the world's leading [credit] rating agencies. The policies we pursue, of a free economy with compassion and social sensitivity, are working and we can see the results of our hard work. We will continue to lead the Israeli economy with responsibility and determination," he said.
Finance Ministry Accountant General Rony Hizkiyahu said that "reaffirming Israel's A+ credit rating and positive economic outlook follow, among other things, the release of the estimated debt-to-GDP ratio figures for 2017, which continued to decline, and the government's compliance with its fiscal frameworks this year."
The rating agency's statement said that its assessment of the Israeli economy was based on factors indicating that Israel's balance of payments will remain strong, while security risks will remain controlled and at their present level.
S&P praised the government for pursuing policies that foster a diverse, modern and prosperous economy, and maintaining it by exercising fiscal discipline and a flexible monetary framework.
The agency's economists noted that the two main issues preventing Israel from garnering a higher credit rating remained a moderate debt burden and regional geopolitical risks.
The report further noted that the diverse nature of the Israeli coalition could hinder the government's ability to tackle long-term issues pertaining to the economy, such as convoluted bureaucracy, infrastructural disparities, housing sector issues, and the lacking integration of some sectors in the workforce.
S&P noted that a continued solid fiscal performance by the government would contribute to upgrading Israel's international credit rating. The agency did, however, warn that should the budgetary or economic performance falter, or if regional security risks grow, Israel's current rating might suffer.
