Credit agencies stay positive despite scandal [p. 16]

International credit rating agencies remain positive and confident about Israel's credit outlook, despite the corruption scandal overshadowing the reliability and transparency of the country's tax system. "You find corruption in almost every country and unless the case affects overall policy-making, slows down reforms or impacts the economy, we don't see much reason to make changes to our outlook," said Standard & Poor's credit analyst Konrad Reuss. "In the case of Israel, I don't see that happening. Israel is different to other emerging market countries. It has an open economy and a very strong private sector." Last month, the Fitch global credit rating agency changed its outlook on the State of Israel's foreign and local currency issuer default rating to "positive" from "stable," while affirming its foreign currency rating at 'A-' and the local currency rating at 'A.' With that announcement, Fitch joined Moody's, another international credit rating agency, which raised its credit outlook on Israel in the first half of 2006. Many are expecting for the S&P's credit rating agency to make a similar move in the near future. Similar to S&P's views, Richard Fox, head of Middle East and Africa sovereign ratings at Fitch, said that although corruption did factor into the assessment of the agency's credit outlook, in the case of Israel, not much attention is paid to the issue. "Israel is in the middle of the road in terms of corruption and cases have come up in the past," he said. "It is a country, where governments come and go so frequently, and thus what we are more concerned about is the security situation and the strength of the fiscal and policy framework."