Background on Key Figures and Context
Yali Rothenberg, Israel’s State Comptroller, has announced that the country is preparing for an international bond offering in early 2026 and has reactivated plans to privatize one of its largest defense companies, Israel Aerospace Industries (IAI). This move aims to alleviate the national debt burden, as declared by a high-ranking official from the Ministry of Finance.
International Bond Offering
Despite ongoing conflicts, Israel managed to raise a record-breaking $8 billion internationally in 2024 and another $5 billion at the start of 2025. Rothenberg, the State Comptroller, expects credit rating agencies to soon upgrade Israel’s credit rating or at least its outlook due to the recent ceasefire in Gaza following two years of conflict.
- Despite the challenges posed by increased defense spending and credit rating downgrades following the October 7, 2023 Hamas attacks, Israel has successfully raised substantial international funds.
- Rothenberg anticipates that credit rating agencies will soon improve Israel’s credit rating, citing the Gaza ceasefire and reduced threats from Lebanon, Syria, and Iran.
Details of the Bond Offering and Privatization Plans
Rothenberg stated that the bond offering’s size and currency have yet to be determined, but discussions with potential investors regarding their interest are already underway.
Simultaneously, the long-debated privatization plan for IAI is progressing. A ministerial group has approved a proposal to sell up to 49% of IAI through an initial public offering, with all parties supporting the sale. Rothenberg confirmed that “serious teams are actively working on this right now.”
Fiscal Policy and Economic Outlook
The planned budget for 2026 aims to cut defense spending from 7% to 5% of GDP, freeing resources for civilian expenditures. This comes as the budget deficit is expected to fall to 3.2% of GDP from 5% in the current year, while public debt is projected to dip below 70% of GDP.
Should the parliament fail to approve the budget by March 31, new elections will be called. Rothenberg, however, believes there are incentives for legislators to pass the budget before the deadline.
Economic growth is projected to accelerate to 5.2% in 2026, up from the estimated 2.8% for 2025. Rothenberg expects 2026 to be a year of recovery, benefiting from additional budgetary margins and the return of hundreds of thousands of reservists to their civilian jobs.
Key Questions and Answers
- What is the purpose of Israel’s international bond offering and privatization plans? The bond offering aims to raise funds while the IAI privatization seeks to reduce national debt.
- How much has Israel raised through bond offerings recently? Israel successfully raised $8 billion internationally in 2024 and another $5 billion at the start of 2025.
- What is the expected impact on Israel’s credit rating? Rothenberg anticipates that credit rating agencies will soon upgrade Israel’s credit rating or at least its outlook due to the Gaza ceasefire and reduced threats.
- What changes does the 2026 budget plan propose? The budget aims to cut defense spending from 7% to 5% of GDP and reduce the budget deficit to 3.2% of GDP.
- What is the projected economic growth for Israel in 2026? Economists expect a growth rate of 5.2% in 2026, up from the estimated 2.8% for 2025.
