Israel, US Sign New Aid Agreement

Article Summary
During a meeting of the US-Israel Joint Economic Development Group, US and Israeli finance officials signed a loan agreement for $3.8 billion in guarantees at Israel's disposal until 2016. The package will free Israel from high interest rates and provide a safety net in case of crisis, reports Tomer Avital.

Finance Ministry Director General Doron Cohen and US Treasury Secretary Timothy Geithner signed yesterday evening [Oct. 23] an agreement on $3.8 billion in guarantees to Israel, which will be available, should Israel choose to access them, until December 2016. The loan agreement signed between the countries in 2003, which expired recently, provided $9 billion in guarantees, of which Israel borrowed $4.5 billion.

“We need the guarantees, because today, we are paying high interest rates to raise capital, despite the fact that our debt-GDP ratio is low,” Cohen explained to Calcalist in a special conversation held in Washington. “The money will also serve as a good safety cushion in case of a crisis,” he said.

The signing of the agreement comes during a meeting of the US-Israel Joint Economic Development Group. Today [Oct. 24] and tomorrow, Cohen and senior officials from the Finance Ministry will meet with their American counterparts to exchange information and look into possibilities for cooperation on economic ventures. 

“The Americans surprised us by sending more senior officials than had been planned,” Cohen said proudly. “And we have [scheduled] dozens of conversations on diverse topics — from partnerships in the cyber realm to how we plan on protecting the gas revenues and the monetary planning of each country. They are interested in bringing American companies here, and the discussion enables the advancement of joint interests.”

Do you intend to adopt any American model that you learned about today?

“The budgetary process here is very interesting, and I may borrow a few ideas for the governing committee that we operate in Israel, with the purpose of including more government ministries.” Cohen noted that it is actually the Americans who are using an Israeli idea — the biennial budget. However, the process that Finance Minister Yuval Steinitz formulated is implemented only in the US Department of Defense, and even there only partially.

The Israeli Treasury officials taking part in the meeting, in addition to Cohen, included Michael Sharel, director of the Finance Ministry’s State Revenue Department; economic envoy Eli Gruner and his economic advisor Roee Wolf; Noa Yehezkel, the Director General’s advisor and other Israeli representatives.

Found in: financial crisis

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