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FITCH MAINTAINS ISRAEL’S CREDIT RATING DESPITE GLOBAL CRISIS

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Monday, January 4th, 2010

“Israel is one of only four A-rated countries that will emerge from the recession in 2009” – Fitch

Credit rating agency Fitch Ratings reiterated Israel’s sovereign debt rating at A with a “Stable” outlook, while Israel’s domestic bond rating was maintained at A+ with a “Stable” outlook. Fitch follows Moody’s Investors Service and S&P, both of which recently renewed their high credit ratings for Israel.

The rating agency said Israel had “fared better” than most countries in the financial crisis, suffering only a mild recession when compared with its similarly-rated European and Asian peers. Though Fitch stated that Israel’s high public debt ratio remains a key constraint to its ratings, it noted that fiscal anchors, such as the spending cap and deficit target, had slashed the ratio from 100% at the end of 2003 to 78% at the end of 2008.

Fitch partly attributed Israel’s good performance to the Bank of Israel’s aggressive monetary policy, including its exchange rate policy and expansion of its foreign currency reserves. Despite falling global demand caused by the economic crisis, Israel’s high-tech and services industries demonstrated stability, and their exports led to an unprecedented current accounts surplus in 2009.