Jerusalem, 17 February 2000

Standard and Poor Raise Israel’s Credit Rating

(Communicated by Finance Ministry Spokesman)

The international credit rating firm Standard & Poor yesterday (Wednesday) 16.2.2000, raised Israel’s external outlook credit rating from "stable" to "positive" and confirmed the external credit rating A- and the internal credit rating of AA-. According to a company press release, the change reflects the significant changes in the structure of the Israeli economy, the significant improvement in the balance of payments and the trustworthiness of its monetary policies. S&P stated that the structural reforms, including bank privatization, foreign currency liberalization, and business environment deregulation, have brought about long-term growth potential of 4-5%. S&P also stated that the raising of Israel’s credit rating depends on the continued reduction of the government deficit, implementing structural reforms and maintaining a low inflationary environment.

Finance Minister Avraham Shohat expressed considerable satisfaction at the announcement, stating that it expresses S&P’s evaluation regarding Israel’s economic situation, which will further strengthen Israel’s economic standing in the world.

The raising of Israel’s credit rating by both S&P and Moody’s represents a qualitative jump for the Israeli economy as a developed state with regard to international investors, so that debates on the premiums that the country has to pay will be a function of its economic behavior rather than its political environment.

The raising of Israel’s rating is occurring against the background of Accountant-General Nir Gilad’s preparations of for an issue in the world’s financial markets and follows a visit to Israel by S&P representatives. He said that the faith expressed by the world’s leading credit-rating companies in the Israeli economy will contribute to the trust of investors in Israel’s first global issue.