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Getting the budget through parliament is a key issue in Standard and Poor's coming revision of Israel's sovereign credit status, Israel's economic leaders learned in a Sunday evening meeting with the Standard and Poor's chiefs.

"The meeting with the heads of the Standard and Poor's credit rating agency was very good," Finance Ministry director-general Ohad Marani told TheMarker late Sunday night, Washington time.

"We presented a general picture of the economic situation in Israel to the two senior managers responsible for sovereign credit ratings, and analyzed the chances of passing the 2003 budget and meeting the deficit target.

The impression the Israeli delegation received was that S&P relates more importance to getting the budget through Knesset than to staying within the deficit target, Marani said. "But we stressed to them that the government made a strategic decision to meet both (goals)."

The S&P sovereign credit rating committee is expected to convene in two weeks to discuss Israel's status.

Israel's current credit rating is A-minus.

Finance Minister Silvan Shalom also attended the meeting at S&P, as did treasury accountant-general Nir Gilad. The treasury dignitaries had flown to Washington for the annual International Monetary Fund conference, but took advantage of the jaunt to meet with the S&P people.

Eleven days ago, S&P downgraded Israel's three biggest banks, sparking fears of a cut in Israel's sovereign credit rating.

"The S&P people were impressed from the budget framework proposed for 2003," Marani said, "and from the deficit target and the fact that no further tax raises are planned.

Going by their questions, Marani said, S&P evidently does not anticipate additional crises in the Israeli economy, and seems to have confidence in "our ability" to navigate economic issues and pass the budget.

Another aspect they asked about was foreign investment in Israel, which has been declining due to the general global trend of reducing tech investment, Marani added.

"They asked how we estimate Israel's economy will be affected by an attack on Iraq," Marani said. We answered that going by experience we gained in the previous Gulf war, the sector most affected then was tourism."

In a recent review of that very question, UBS Warburg concurred with that conclusion, noting that this time around damage to tourism will be minimal because tourism has already dropped to almost zero.

Another aspect that intrigued the S&P chiefs was Israel's tax reform, Marani said. "They noted that given Israel's economic situation, passing such a reform is an impressive step by the government."