(San Francisco) The rating agency Fitch on Monday downgraded Israel’s debt rating by one notch, from “A+” to “A”, because of the conflict with the Palestinian Hamas, which risks “lasting until 2025”, according to the institution.
“The conflict in Gaza could last until 2025 and there are risks that it could spread to other fronts,” Fitch said in a note.
“In addition to human losses, it could result in significant additional military expenditures, destruction of infrastructure and cause lasting damage to economic activities and investments, leading to a further deterioration in Israel’s credit outlook.”
Public finances have been hit, and Israel is expected to run a budget deficit this year, the agency estimates.
In February, the rating agency Moody’s was the first to lower Israel’s debt rating, also by one notch, to A2, because of the conflict.
The rating agency S&P Global followed suit in April, lowering Israel’s debt rating from AA- to A+, which nevertheless indicates a strong capacity to repay, in the face of “increased geopolitical risks.”
PHOTO EYAD BABA, AGENCE FRANCE-PRESSE
People walk past the rubble of buildings hit by Israeli shelling in Nusseirat, in the central Gaza Strip, August 12, 2024.
On Monday, France, Germany and the United Kingdom jointly called for a truce “without further delay” between Israel and Hamas in the Gaza Strip.
The mediating countries – Egypt, Qatar and the United States – had already called a few days ago for the resumption, on August 15, of discussions on a truce associated with the release of the hostages. Israel confirmed on Monday that it would participate in these discussions.
Hamas, for its part, called on mediators on Sunday to “present a road map” to “implement” the plan “based on the vision” of US President Joe Biden, approved by the UN Security Council, instead of organizing new talks.
According to Fitch, a continuation of the conflict next year would force Israel to maintain its high military spending and further disrupt the tourism, construction and manufacturing industries in the border areas.
Israel has vowed to destroy Hamas, which has ruled Gaza since 2007 and which it considers a terrorist organization along with the United States and the European Union, after the attack on its soil on October 7, which resulted in the death of 1,198 people, mostly civilians, according to an AFP count based on official Israeli data.
The Israeli retaliatory offensive on the Gaza Strip has left at least 39,897 dead, according to data from the Hamas-run Gaza government’s health ministry, which does not detail the number of civilians and fighters killed.