Fitch Ratings maintained Israel's "A+" sovereign credit rating on Tuesday and removed the country from "rating watch negative" despite concerns over Israel's war against the Palestinian terrorist group Hamas in Gaza.
At the outset of the conflict in October, Fitch placed Israel's sovereign debt rating on negative watch and warned a major escalation of the conflict could result in a downgrade. However, the risk of a rating downgrade, similar to that dealt by Moody's in February, has not been completely removed; Fitch ratings' outlook for Israel remains negative to "reflect the combination of uncertainties around the fiscal trajectory and the war's duration and intensity, including the risk of regional escalation."
Fitch said it foresees a near-term jump in the debt-to-GDP ratio and persistently higher military spending amid Israel's fractious domestic politics and an uncertain economic outlook, which could limit Israel's ability to bring down debt in the future.
