JERUSALEM, Nov. 28 (Xinhua) -- The ceasefire with Hezbollah in Lebanon may limit strains on Israel's credit profile, Fitch Ratings said in a report on Thursday.
"A durable de-escalation of armed conflict between Israel and Hezbollah -- potentially as a result of the 60-day ceasefire that began on Nov. 27 -- could help to limit pressure on Israel's public finance metrics," the credit rating agency said.
In the agency's view, however, the ceasefire is likely to be fragile, and prospects for an imminent ceasefire in the Gaza Strip remain poor.
In August, Fitch downgraded the Israeli government's credit ratings from A+ to A, with a negative outlook, reflecting the impact of the continuation of the Gaza war, heightened geopolitical risks, and Israel's military operations on multiple fronts.
"The ceasefire with Hezbollah, if sustained, would reduce fiscal risks, but developments in Gaza and with Iran will still play an important role in determining Israel's fiscal and economic trajectory," the report noted.
Meanwhile, Moody's, which downgraded Israel's credit ratings to Baa1 from A2 in September, said, "It is too early to say whether these risks (that could lead to further credit rating downgrade) will be significantly and sustainably reduced."
It stated that the Israel-Hezbollah ceasefire reduces one source of geopolitical risk, but Israel still faces ongoing domestic political tensions, including disputes over the Supreme Court and the exemption of the ultra-Orthodox Jews from military service.
