Israel: Smotrich downplays concerns over faltering economy saying judicial overhaul will 'boost growth'

Israel: Smotrich downplays concerns over faltering economy saying judicial overhaul will 'boost growth'
Israel's extremist finance minister Bezalel Smotrich has dismissed concerns that the planned judicial overhaul will damage the country's economic growth.
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Israel's far-right cabinet plans to overhaul the country's judicial system [source: Getty]

Israel's extremist Finance Minister Bezalel Smotrich on Sunday said Moody's decision to cut the outlook for Israel's sovereign credit rating was "not a big drama" and that the government's plan to overhaul the judiciary would help the economy.

Moody's Investors Service on Friday lowered Israel's outlook to stable from positive, saying the planned reforms could weaken Israel's institutions. Israel's sovereign credit rating was affirmed at "A1".

Israel's far-right government is seeking to give politicians greater sway over selecting judges and to limit the power of the Supreme Court to strike down legislation in reforms that have sparked mass protests.

Prime Minister Benjamin Netanyahu, under pressure at home and abroad, has agreed to delay the overhaul to try to negotiate a middle ground, but demonstrations have continued.

Smotrich told a session of parliament's finance committee during a debate on the 2023-24 state budget that Israel's credit outlook was lowered in 2020, but raised in 2022.

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"I take the opinion seriously but it's not big drama," he said, noting Moody's had also pointed to a strong economy.

Smotrich, who leads the extreme-right Religious Zionism bloc, said he did not "think economists are great experts on the judicial issue," and that any damage to the economy would come from the campaigns against the overhaul.

He said the overhaul plan will bolster Israel's economy.

Data published on Sunday showed that the economy grew an annualised 5.3 percent in the fourth quarter from the prior three months, versus a prior estimate of 5.6 percent. Israel's economy grew 6.5 percent in 2022 but the Bank of Israel foresees 2.5 percent growth this year.

On the heels of Moody's action, Israeli government bond prices were down as much as 0.9 percent, while Tel Aviv share indexes were down 0.2 percent. The shekel doesn't trade on Sundays but it weakened 0.7 percent versus the dollar in New York on Friday.