...Negative Outlook on Broadening Risks: Fitch Ratings' Negative Outlook on Israel reflects the combination of uncertainties around the fiscal trajectory and the duration and intensity of the current war in Gaza, including the risk of regional escalation. We expect a near-term jump in debt/GDP and persistently higher military spending in the context of fractious domestic politics and uncertain macroeconomic prospects, which could limit Israel's ability to bring down debt in the future. War Continues: Israel has announced its intention to enter the city of Rafah in the South of Gaza, and we expect the war to continue in the second quarter of 2024, with a risk of intense operations continuing beyond. Wide Budget Deficits: The budget deficit reached 4.1% of GDP compared with the initial government budget of 0.9%. We forecast a budget deficit of 6.8% in 2024, slightly above the budget's forecast. We project a budget deficit of 3.9% for 2025, reflecting our expectation that war-related military...
