A+ / A Higher Rating - at Society's Expense

Israel is the only developed country whose debt rating has improved since the global financial crisis broke out in 2008.

Amid these dark days of bad news on the security and political fronts, international credit-rating agency Standard & Poor's announced Friday that it's raising Israel's sovereign-debt rating to A +, drawing big smiles from the policy makers in Jerusalem and the economic players in Tel Aviv.

S&P is one of the three big international rating agencies, alongside Moody's and Fitch, and it's also the most important. It recently downgraded the United States from its sterling AAA rating to AA +, creating a global storm.

Israel's accomplishment is particularly notable given that it is the only developed country whose debt rating has improved since the global financial crisis broke out in 2008. It is international recognition of Israel's strength and stability, and a vote of confidence in the country's standing should the world be thrown back into recession.

There is additional economic significance: Israel will become more appealing to international investors looking for attractive markets.

Local faith in Israel's economy will increase, too. The government will be able to raise money at cheaper interest rates and to recycle existing debt in order to pay lower interest on it. No less important, local companies will also be able to get easier, cheaper credit on global markets.

Israel has waited for this moment for years. It comes at a surprising time - when two important bodies are slated to publish their conclusions, the Trajtenberg committee and the committee on economic concentration. It also comes after the OECD accepted Israel as a member, another mark of economic accomplishment.

Yet Israel paid no small price to achieve this ratings upgrade. As S&P, the finance minister, the prime minister and the Bank of Israel governor said, they all believe the most important thing is financial conservatism, maintaining the budget, and reducing the national debt. All this is in order to reduce that sacred number, the debt-to-GDP ratio.

This means taking every opportunity to lower the debt. And indeed, the debt-to-GDP ratio was reduced nicely over the past few years; instead of using excess tax revenues and economic growth to serve the public by increasing the budgets for education, health, welfare and infrastructure, the Finance Ministry used this money to lower the debt ratio.

If you will, that's the entire story of Israel's social protest.