UNS/Reuters: Moody’s Investors Service said on Tuesday that passage of a new law in Israel limiting some Supreme Court powers signalled that political tensions will continue and likely have negative consequences for Israel’s s economy and security situation.
“We believe the wide-ranging nature of the government’s
proposals could materially weaken the judiciary’s independence and disrupt effective checks and balances between the various branches of government, which are important aspects of
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strong institutions,” Moody’s said in a report.
The agency did not take any ratings action on Israel. In April, Moody’s downgraded Israel’s outlook to stable from positive but affirmed Israel’s sovereign credit rating at “A1”
Israeli doctors declared a strike and black ads covered newspaper front pages on Tuesday in a backlash over the hard-right government’s ratification on Monday of the first part of a judicial overhaul that critics say endangers democracy.
Since the plan was announced in January, mass protests have taken place across Israel while foreign investors have been spooked, sending the shekel down 10% versus the dollar as the country’s risk premium has risen.
“The executive and legislative institutions have become less predictable and more willing to create significant risks to
economic and social stability,” Moody’s said.
It cited data that some 80% of new Israeli startups have chosen to register overseas this year, up from 20% in 2022, while the Tel Aviv and Nasdaq share exchanges have diverged.
