The day after the publication of the exceptional report by the international rating agency "Moody's," Minister of Finance, Bezalel Smotrich, held a discussion today (Wednesday) with the management of the Ministry of Finance regarding the implications of the agency's announcement and its consequences.
"The Ministry of Finance takes this matter seriously," stated the ministry's announcement. "We maintain close contact with credit rating agencies and international economic bodies, regularly examining the state of the economy and the perceived risks, among others, through these bodies."
As previously reported in the credit rating agency report, the passage of the law to limit the Clause of Reasonability poses a "significant risk of harming the economy." According to the report, the political and social tensions surrounding the judicial reform are expected to have negative implications on Israel's economy and its security situation.
"On July 24th, the Israeli parliament passed a law preventing the Supreme Court from using the Clause of Reasonability to overturn government and ministerial decisions," the report stated. "The government believes that reasonability grounds allowed the court to assume authorities not granted to it, but opponents of the law argue that this is a first step towards a significant impact on checks and balances, which are an important component of Israeli democracy."
According to their statements, "there is a significant risk that political and social tensions in Israel will persist, which will negatively impact the economic and security situation in the country. We downgraded Israel's credit rating outlook last April to reflect our position that the Israeli government is regressing, and its proposals will harm the independence of the judiciary system. Israel doesn't have a constitution mainly relying on judicial oversight. The conduct of the legislative and executive authorities has also become less predictable, as they are more willing to jeopardize economic and social stability."
They also warned that "a large number of reservist soldiers threatened to stop reporting for duty if the law passes, raising concerns about the impact on Israel's security and escalation of violence against Palestinians. While political protests haven't historically affected the Israeli economy, severe security escalation could harm relations with Arab states and make it challenging to form relationships with Middle Eastern countries such as Saudi Arabia."
