Moody's won't change Israel's credit rating

Credit rating firm Moody's informed Finance Minister Silvan Shalom that it isn't planning to change Israel's credit rating, which is expected to remain A-.

On his visit to the United States Shalom has met with senior officials from the rating company. The ministry said that Moody's executives told Shalom they intend to leave unchanged Israel's credit rating, and that Moody's will continue following economic developments in Israel.

The announcement is important given the economic developments, as well as security and political developments. Because the security situation burdens the economy, some Israeli economists believe that credit rating companies may reconsider Israel's rating.

Such estimates were recently raised following publication of the high government deficit for 2001, which came to 4.6% of gross domestic product. These estimates are also based on forecasts that this year's deficit will exceed its target.

A Finance Ministry spokesman said that senior Moody's executives who met with Shalom said that they will continue following issues relating to the budget, and whether the government meets deficit targets. The spokesman said that the executives expressed admiration for Israel's fiscal and budget navigation. The executives wanted to hear about ministry proposals approved by the Knesset. These proposals reform planning laws in order to shorten the time needed for approving infrastructure projects. The executives also expressed interest in transferring civil servants from budgetary to cumulative pensions.

During his U.S. visit Shalom also met with Lehman Brothers (NYSE:LEH) executives and with executives from Salomon Smith Barney. Shalom reviewed the recent economic developments. Stanley Fischer, until recently first deputy managing director at the International Monetary Fund, attended the meeting too. Today Fischer serves as Citigroup (NYSE:C) vice chairman.

This evening Shalom is due to launch the 2002 campaign of the Israel Bonds at the Ritz Carlton Hotel, Palm Beach, Florida. Shalom will be meeting with members of the Bonds board. He will be accompanied by Finance Ministry Director General Ohad Marani, and Accountant General Nir Gilad.

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