Jerusalem, 31 December 1998
ISRAEL'S FOREIGN CURRENCY BALANCE 1998-1999
(Communicated by Finance Ministry Spokesman)
On Tuesday, 29.12.98, Accountant-General Shai Talmon announced that,
during the course of 1998, the Government of Israel raised a total of $2.6
billion in foreign currency for the sake of financing its foreign currency
expenses. In so doing, Israel succeeded in fully implementing its plans to
raise foreign currency, despite the predicament of international financial
markets, which face greater uncertainty and crisis. Talmon emphasized that
the Government's presence in international financial markets makes it
possible to establish a benchmark for banks and other corporations.
The 1998 target was reached as follows:
* In January 1998, the Accountant-General raised the balance of funds from
the US Government loan guarantee program -- amounting to $1.416 billion
over 30 years, at 6.03% rate of interest.
* On 10 December 1998, the Government raised about $250 million via
30-year Yankee bonds at 7.25%.
* About $875 million was raised through the Israel Bonds ("Independence
and Development Loans") organization, in the form of bonds to redeemed
within the next 15 years.
* About $40 million was raised on credit from various European
institutions.
The Accountant-General added that the State of Israel's international
credit rating, and the perception of Israel as a technologically advanced
country with great potential for growth, have, in recent years, created
the conditions for international financial activity that has facilitated
the achievement of strategic goals -- such as the penetration of financial
markets, the creation of new sources of financing, the opening of
international markets to Israeli business through establishing reference
points for the Israeli economy, the re-composition of the national
debt.
According to Talmon, the State of Israel's plans to raise foreign currency
(about $2.4 billion) in 1999 incorporate its desires:
* to strengthen Israel's ability to raise funds in international financial
markets through independent bond issues,
* to establish a benchmark which will enable Israeli firms to raise
low-cost capital in these markets,
* to examine the united European market and its activities, in the wake of
the 1.1.99 introduction of the Euro currency,
* to preserve its ability to raise capital through various channels --
such as banking syndicates and the Euro Medium Term Notes (EMTN)
program.
With these objectives in mind, The Accountant-General has identified five
sources from which to raise the required funds:
1. In the event that the Euro proves to function as a stable
currency, and that certain other relevant conditions are met, the
Accountant-General will float a preliminary and experimental issue of
$200-300 million on the Euro market.
2. After evaluating developments influencing the global banking
system, in light of recent crises (particularly in Japan), about $150
million will be enlisted through a European banking syndicate.
3. About $550 million will be raised through the EMTN program, as
either private loans or public financing.
4. About $900 million will be raised by the Israel Bonds
organization. (Talmon indicated that emphasis will be placed on lowering
organizational costs, selling bonds to individual investors and Jewish
communities, and presenting Israel Bonds as an alternative avenue for
raising institutional capital.)
5. The balance of the funds will be raised by taking advantage of
the flexibility given to the Accountant-General vis-a-vis the use of the
deposit from the US Government loan guarantees.