Fitch, a globally recognized credit rating agency, confirmed on Monday that it has decided to maintain Israel's credit rating at A+, with the outlook remaining "stable". Despite this affirmation, Fitch expressed concerns over the proposed judicial reforms which might adversely affect the nation's economic indicators.

Fitch elaborated, "While the government has toned down its initial judicial reform package, it still remains a subject of much debate and has encountered stiff resistance from both civil society and political quarters. Notably, recent legislation now prevents the supreme court from overturning laws based on the principle of 'reasonableness'. Additionally, while the government aims to modify the appointment process for the committee responsible for selecting judges, it seems to have stepped back from granting an automatic majority in the appointment committee to the existing ruling coalition. Furthermore, a previous proposal that would have allowed the parliament to overrule Supreme Court decisions on legislation has been shelved."

How disappointing for the Bibi-haters who have latched onto the issue of judicial reform to try to re-run the election https://t.co/f52TkJkAl3

— (((Jonathan Hoffman))) (@jhoffman1) August 14, 2023

Fitch further commented on the potential ramifications of these reforms, stating that they "could adversely influence Israel's credit metrics, especially if the dilution of institutional checks and balances leads to unfavorable policy results, persistent negative investor perception, or deteriorates governance standards. In some countries where significant curbs on institutional checks were implemented, there was a marked decline in the World Bank governance indicators (WBGI), a critical parameter in Fitch's Sovereign Rating Model (SRM). The exact impact on Israel's WBGIs remains to be seen. Presently, Fitch believes these reforms won't likely lead to a significant departure of talent and capital from Israel's robust high-tech sector."

Following Fitch's announcement, there was a noticeable shift in trading trends on the Tel Aviv Stock Exchange. Both the TA 35 and TA 125 indices saw gains, rising by 0.40% and 0.50%, respectively. Reacting to this development, Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich issued a joint statement: "Israel's sustained credit rating at A+ and the 'stable' outlook is a testament to what we've reiterated time and again: Israel boasts a robust, resilient, and dynamic economy. Investing in Israel invariably leads to returns. The policies overseen by Prime Minister Netanyahu and Finance Minister Smotrich, encompassing a restrained budget, wage agreements, and a commitment to free-market principles, attest to Israel's diversified economy, its high value addition, and formidable external financial metrics."

Prime Minister Benjamin Netanyahu:

"A short time ago, we received very good news. Fitch Ratings has kept Israel's credit rating at A+.

This is a very high rating. pic.twitter.com/XDPfSkMaZx

— Prime Minister of Israel (@IsraeliPM) August 14, 2023

The duo further commented on the narrative surrounding Israel's economy, saying, "Contrary to what some news outlets might portray, the actual economic data paints a vastly more optimistic picture. We're determined to uphold this positive trend, despite any unfounded fears being propagated."