The eyes of the world were on Israeli Prime Minister Binyamin Netanyahu’s new government on Thursday, and that included the financial world.
Moody’s International credit ratings agency took an unwelcoming stance toward the coalition agreements, which call for additional spending in the billions of shekels, likely to jeopardize the budget deficit target for 2016.
“The concessions made in order to form the coalition will undoubtedly influence the Israeli government’s 2016 budget,” Moody’s says.
According to its assessment, the various concessions made to coalition partners will cost the state something on the order of NIS 8 billion.
Moody’s writes, “The new finance minister will find it hard to cut the deficit to 2.5% of GDP this year and 2% next year. While the improvement in the economy and tax revenues is expected to lead to an improvement in Israel’s credit conditions this year, the concessions that were made during the coalition negotiations might lead to a worsening of the deficit in 2016.