Fitch ratings affirmed Israel’s long-term foreign currency issuer default rating (IDR) at “A” and local currency IDR at “A+” with a stable outlook.
“The affirmation reflects the resumption of the downward trend in public deficits and debt, the robust outlook for Israeli growth, and a strengthening in the sovereign’s external balance sheet,” said Purvi Harlalka, director at Fitch’s Middle East and Africa Sovereign Ratings Group.
The ratings agency noted that the improvement in public finances reflects both revenue growth as a result of buoyant output, as well as expenditure control, resulting from the adoption of new fiscal rules. Given that, the central government deficit fell to 3.8% of GDP in 2010 from 5.2% in 2009 and debt moderated to 76.6% of GDP from 79.3% in 2009.
Fitch also noted that the Israel market would likely benefit from recent substantial gas discoveries and a much lower level of unfunded pension liabilities than in other OECD countries.