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Israel Finance Minister: Moody's Downgrade Unreasonable, Politicized

People look at an installation with candles which makes out the number of days the hostages have been captive since October 7, as people begin to gather for a protest against Israeli Prime Minister Benjamin Netanyahu's government, at Habima Square in Tel Aviv, Israel, February 10, 2024. REUTERS/Susana Vera
People look at an installation with candles which makes out the number of days the hostages have been captive since October 7, as people begin to gather for a protest against Israeli Prime Minister Benjamin Netanyahu's government, at Habima Square in Tel Aviv, Israel, February 10, 2024. REUTERS/Susana Vera
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Israel Finance Minister: Moody's Downgrade Unreasonable, Politicized

People look at an installation with candles which makes out the number of days the hostages have been captive since October 7, as people begin to gather for a protest against Israeli Prime Minister Benjamin Netanyahu's government, at Habima Square in Tel Aviv, Israel, February 10, 2024. REUTERS/Susana Vera
People look at an installation with candles which makes out the number of days the hostages have been captive since October 7, as people begin to gather for a protest against Israeli Prime Minister Benjamin Netanyahu's government, at Habima Square in Tel Aviv, Israel, February 10, 2024. REUTERS/Susana Vera

Israeli Finance Minister Bezalel Smotrich on Saturday brushed off a Moody's downgrading of Israel's credit rating, saying the decision linked to the Gaza war was not based on sound economic reasoning and was tantamount to a pessimistic "manifesto.”
"The Israeli economy is strong by all measures. It is capable of sustaining all war efforts, on the front line and home front, until, with God's help, victory is achieved," he said in a response to the decision published on Friday.
Citing material political and fiscal risks for Israel from its war with the Palestinian militant group Hamas, raging since October, Moody's cut the country's rating to "A2", which is five notches above investment grade, while its credit outlook was kept at negative, meaning a further downgrade is possible.
The agency said it expects Israel's debt burden to be "materially higher" than projected before the conflict and defense spending to be nearly double the level of 2022 by the end of this year in its baseline scenario.

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Washington Urges Israel to Extend Cooperation with Palestinian Banks

A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
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Washington Urges Israel to Extend Cooperation with Palestinian Banks

A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)

The United States on Thursday called on Israel to extend its cooperation with Palestinian banks for another year, to avoid blocking vital transactions in the occupied West Bank.

"I am glad that Israel has allowed its banks to continue cooperating with Palestinian banks, but I remain convinced that a one-year extension of the waiver to facilitate this cooperation is needed," US Treasury Secretary Janet Yellen said Thursday, on the sidelines of a meeting of G20 finance ministers in Rio de Janeiro.

In May, Israeli Finance Minister Bezalel Smotrich threatened to cut off a vital banking channel between Israel and the West Bank in response to three European countries recognizing the State of Palestine.

On June 30, however, Smotrich extended a waiver that allows cooperation between Israel's banking system and Palestinian banks in the occupied West Bank for four months, according to Israeli media, according to AFP.

The Times of Israel newspaper reported that the decision on the waiver was made at a cabinet meeting in a "move that saw Israel legalize several West Bank settlement outposts."

The waiver was due to expire at the end of June, and the extension permitted Israeli banks to process payments for salaries and services to the Palestinian Authority in shekels, averting a blow to a Palestinian economy already devastated by the war in Gaza.

The Israeli threat raised serious concerns in the United States, which said at the time it feared "a humanitarian crisis" if banking ties were cut.

According to Washington, these banking channels are key to nearly $8 billion of imports from Israel to the West Bank, including electricity, water, fuel and food.