Moody’s warns it could downgrade Israel’s credit rating because of war with Hamas

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Moody’s Investors Service warned Thursday it could downgrade Israel’s credit rating due to the severity of the military conflict with Hamas.

A downgrade could make it more expensive for Israel to borrow just as the country gears up for what could be a prolonged war.

“Israel’s credit profile has proven resilient to terrorist attacks and military conflict in the past,” Moody’s said. “However, the severity of the current military conflict raises the possibility of longer lasting and material credit impact.”

Moody’s said its review will focus on the duration and scale of the conflict — and how it impacts Israel’s economy, institutions and public finances. The credit ratings firm said the review could take longer than the typical three-month period.

In July, before the deadly terror attacks by Hamas against Israel, Moody’s warned that a controversial overhaul of Israel’s judicial system risked plunging the country into further turmoil that could hurt its economy and security.

“There is a significant risk that political and social tensions over the issue will continue, with negative consequences for Israel’s economy and security situation,” the credit ratings firm wrote in a report at the time.

The Israeli parliament passed a law in July stripping the Supreme Court of its power to block government decisions. The dramatic move set off angry protests, threats of strikes from workers and selling from investors.

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