A key US Senate committee last week extended from three to five years the period during which Israeli is entitled to use US loan guarantees, with an option for one more year. The extension is part of the Senate’s 2005 appropriations bill.
The US granted Israel a $10 billion aid package in 2003: $1 billion in special military aid, and $9 billion in loan guarantees. The guarantees were spread over three years - $1 billion in each year.
Israel is now in the second year of the original three-year period, and has so far taken $3.35 billion in commercial loans, backed by the guarantees. The loan guarantees enable Israel to benefit from lower interest rates. Israel will now be able to use the remaining guarantees until 2007, with an option to extend the period until 2008, if the US president approves.
The extension means that Israel’s Ministry of Finance will be able to issue bonds backed by guarantees at any time convenient for Israel, without worrying about the imminent end of the guarantee. The extension requires approval in the Senate plenum and the consent of the House of Representatives, which did not include this benefit for Israel in its 2005 appropriations bill. This consent must be given in the joint Senate-House committee for formulating a joint budget proposal.
It is believed that the extension will pass through Congress without difficulty, and become part of the Appropriations Act for the coming fiscal year.
Israel’s Ministry of Finance initiated the extension, in an effort to make use of the guarantees more flexible, in view of the improvement in the Israeli economy. Following a request from Israel, the Foreign Operations Appropriations Subcommittee of the Senate Committee on Appropriations, chaired by Senator Mitch McConnell (R. Kentucky), granted Israel at least an additional two years in which to use the US loan guarantees.
”We thank the Foreign Operations Appropriation Subcommittee for its decision,” Minister for Economic Affairs at the Israel Embassy in Washington Boaz Raday told “Globes”. “Israel still needs the guarantees, but the economic recovery makes it possible to use them at more judicious times, not subject to an inflexible time framework.”
Published by Globes [online] - www.globes.co.il - on September 19, 2004