(Communicated by the Ministry of Finance)

International rating company S&P has announced its decision to reiterate Israel's A+ credit rating with a stable outlook. Approximately three weeks ago S&P ratified Israel's credit rating, but in the wake of the Prime Minister's announcement of early elections and the fact that 2013 will begin without an approved budget, S&P decided to reexamine Israel's credit rating. As stated, S&P decided to reiterate the credit rating.

In their announcement, the representatives of S&P noted that bringing the elections forward increases the uncertainty regarding the balance of power in the future coalition that will be formed and the scope of government spending, which is liable to increase in 2013. Nevertheless, S&P believes that whatever government is established after the elections will proceed with the present administration's sound and cautious macroeconomic policy.   In addition, S&P explained that their decision with regard to the early elections was made after the principal steps to increase the government's revenues by more than one percent of the GDP had already been taken.

S&P also noted that they anticipate a deficit of 4% of the GDP in 2012 and a deficit of 3.3% in 2013. The relatively low anticipated growth rates and deficit will slow down the reduction in government debt.

S&P reiterated their announcement of three weeks ago, i.e. that if the downtrend in government debt does not continue, this could put downward pressure on the credit rating.  A drop in growth or the deterioration of the security situation could also put pressure on the credit rating. 

As S&P stated in the past, the stable outlook reflects their opinion that despite the existing budgetary pressure, particularly during the elections period, the government will maintain the scope of expenditures in the future.

Minister of Finance Dr. Yuval Steinitz noted that "S&P also recognizes the fact that we will not adopt an elections economy. The ratification of Israel's credit rating, with a stable outlook, constitutes additional evidence of the responsible economic policy of the present government and the Minister of Finance." 

Israel's present rating by the international rating companies is as follows:

• S&P : A+ Stable
• Fitch: A Stable
• Moody's: A1 Stable