“Israel will achieve full foreign currency financing independence in early 2007, a year before the US loan guarantees are used up. Israel is now closer than ever before to achieving this independence,” Accountant General Dr. Yaron Zalika told “Globes” last night.
Zalika and State of Israel Bonds president and CEO Joshua Matza held a series of meeting this week in Las Vegas, Los Angeles, and San Francisco with investors, bankers, and Jewish leaders, in an effort to renew Israel Bonds fundraising on the US West Coast, from where Israel Bonds has been absent for several years. Strengthening Israel Bonds is one of the cornerstones of the Account General’s strategy for full financing independence. Under this strategy, approved by Minister of Finance Ehud Olmert, Israel Bonds will become one of the most important tools for raising foreign currency.
Zalika said the Ministry of Finance hoped to complete laying the foundation for financing independence by the end of 2006, so that Israel would be able to stand on its own feet in the foreign currency markets in 2007.
“The idea is, that when the US loan guarantees are no longer available to Israel in 2008, the economy will not face problems raising foreign currency on the dollar or euro market,” Zalika said. He added that a special effort would be made to repeat the success of Israel’s recent issue on the euro market. He said this “dizzying success” enabled Israel to replace expensive debt with cheap debt. “We were able to obtain an interest rate of only 63 basis points (0.63%) above the interest rate German Federal Finance Ministry bonds, which are rated AAA. This was an unprecedented achievement for us.”
Zalika said Israel needed $3 billion in foreign currency a year. Under the Ministry of Finance’s strategic plan, Israel Bonds will raise half this amount each year, thereby becoming one of the pillars of Israel’s capital raising system. Israel will raise the rest of the money by independent issues on international markets. The recent bond issue on the euro market was therefore a breakthrough, “because it’s impossible to rely solely on the US market.”
Zalika said that, in order to consolidate Israel Bonds’ standing as one of the two capital raising pillars, it will have to be thoroughly overhauled. The interest rate on Israel Bonds used to be set once a month, a practice that caused heavy losses, because of the inability to respond quickly to market changes. The interest rate will now be set every fortnight, and the goal is be able to set the interest rate daily.
During their current visit to the US West Coast, Zalika and Matza are laying local infrastructures and recruited regional Jewish leaders and activists for Israel Bonds’ activities. Zalika and Matza activities were coordinated through regional offices. In Las Vegas, for example, the fastest growing city in the US, there is a large and wealthy Jewish community whose fundraising potential has not yet been tapped. “We simply overlooked it,” said Zalika.
Published by Globes [online], Israel business news - www.globes.co.il - on November 23, 2005