Moody’s downgrades Israel’s credit outlook, citing ‘deterioration of governance’

Leading rating agency Moody’s downgraded Israel’s economic outlook from positive to stable on Friday, citing the “deterioration of Israel’s governance” amid months of upheaval over the government’s highly contentious bid to dramatically overhaul the judiciary.

The report Friday confirmed fears that Israel’s credit outlook could be knocked down, as Moody’s had warned last month, if the hardline government of Prime Minister Benjamin Netanyahu pursues plans to bring most judicial appointments under political control and dramatically curb the powers of the High Court of Justice. If implemented in full, the proposals for judicial revamp would “materially weaken the strength of the judiciary and as such be credit negative,” Moody’s said in a six-page report in early March.

Weekly mass protests around the country against the government’s persistent efforts to weaken the judicial system have continued even after Netanyahu paused the legislation late last month to allow dialogue on reaching a compromise between the sides. Coalition members have nevertheless vowed to press forward with the legislative push after the Knesset’s Passover recess. READ MORE