Israeli credit rating agency Moody’s issued a special report on Tuesday warning investors about the political and security situation in the Zionist entity, while maintaining the country’s credit rating at Baa1 with a “negative outlook.”

The report did not include any immediate rating action but highlighted significant concerns regarding the political stability in the Zionist entity.

“The credit rating of Israel currently reflects very high political risks that weaken the country’s economic resilience,” Moody’s economists wrote in the report.

“Uncertainty over Israel’s longer-term security and economic growth prospects are much higher than is typical, with risks to the high-tech sector particularly relevant, given its important role as a driver of economic growth and significant contributor to the government’s tax take,” Moody’s said in a regular update report on the occupation regime’s credit rating.

“Such negative developments would have potentially severe implications for the government’s finances and may mark a further erosion in institutional quality,” the agency said.

NEWS | Moody’s, in its latest periodic review, has maintained Israel’s credit rating at Baa1 with a negative outlook, citing “very high political risks” that have weakened the country’s economic and fiscal strength.

Despite Israel’s resilience to shocks, investor uncertainty… https://t.co/S20jABPgi2 pic.twitter.com/LT0Fi1nqKW

— Drop Site (@DropSiteNews) March 26, 2025

Both Fitch and Moody’s over the past year lowered the credit score of the Zionist entity and maintained a negative outlook, warning that the occupation regime could be facing further downgrades.

In Tuesday’s update, Moody’s said that the negative outlook reflects the rating agency’s view that “downside risks” on the Israeli credit score persist.

However, Moody’s said the credit profile of the Zionist entity “remains supported by historically strong economic resilience to shocks, high wealth levels, which provide some shock absorption capacity, a solid external position, and the government’s continued strong market access.”

“We may stabilize the outlook if there are clear prospects for a durable cooling down of the military conflicts, in turn allowing Israel’s institutions to formulate policies that support the recovery of the economy and public finances and restore security while dealing with a wide range of policy priorities,” Moody’s said.

The report was issued amid financial jitters over the renewal of the government’s contentious judicial overhaul and the renewal of the war on on Gaza.

Earlier on Thursday, anti-government protesters took to streets to demonstrate against the passing of 2025 budget and against the renewal of the war on Gaza, calling for going ahead with a deal aimed at releasing the Israeli captives held by Hamas in the besieged enclave.

Source: Israeli media