Fitch lowers Israel's ratings from A+ to A

Credit ratings agency Fitch has downgraded the Israeli government's credit ratings from A+ to A, with the outlook remaining unchanged at "negative."

Fitch said in a report on Monday night that the downgrade reflects the impact of the continuation of the war in Gaza, heightened geopolitical risks, and military operations on multiple fronts, reports Xinhua.

It noted that public finances of Israel have been hit, and projected a budget deficit of 7.8 per cent of GDP in 2024 and debt to remain above 70 per cent of GDP in the medium term.

The agency added that the conflict in Gaza could last well into 2025 and there are risks of it broadening to other fronts, which implies "continued high spending on immediate military needs, and disruptions to production in the border areas and tourism and construction."

"In addition to human losses, it could result in significant additional military spending, destruction of infrastructure, and more sustained damage to economic activity and investment, leading to a further deterioration of Israel's credit metrics," the report stressed.

According to the agency, recent tensions between Israel and regional powers highlighted "the high level of tensions in the region and the risk of escalation that could further damage Israel's credit profile."