S&P Global revised Israel’s outlook to “stable” from “negative” on Friday, citing reduced probability of security risks after an October ceasefire agreement with Hamas, potentially putting an end to a two-year war that has roiled the Middle East.

The truce, part of a U.S.-brokered plan, saw the suspension of military operations, an exchange of living hostages and prisoners, the withdrawal of Israeli troops from major cities of Gaza and the resumption of humanitarian aid, though negotiators still face hurdles on some of the thornier issues that previous initiatives have foundered on.

Foreign ministers from several Muslim-majority countries met in Istanbul this week to discuss the fragile Gaza ceasefire.

“The outlook reflects our assumption that the scale of direct military confrontation will remain contained, even if tensions between Hamas and Israel persist and the broader regional security environment remains fragile,” S&P said.

Reuters reported, citing a senior U.S. government official, that the United Nations Security Council on Thursday would start negotiations on a U.S.-drafted resolution to endorse President Donald Trump’s Gaza peace plan.

S&P, however, flagged uncertainty over Israel’s fiscal settings for 2026 ahead of parliamentary elections.

The cabinet is due to vote next month on the long-delayed 2026 budget, Finance Minister Bezalel Smotrich said on Tuesday, but approval faces stiff political resistance that could trigger early polls.

The finance ministry cut its 2025 economic growth forecast to 2.8%, and expects 5.2% growth in 2026. It estimates a budget deficit of 3.2% of GDP next year.

S&P expects a general government deficit of slightly below 6% of GDP in 2025 and 4.8% of GDP in 2026.

Israel’s long-term foreign currency sovereign credit rating was affirmed at “A/A-1”. (Reporting by Aatrayee Chatterjee in Bengaluru; Editing by Alan Barona and Shilpi Majumdar)