Finance Ministry Calls Conference Affirming Israel’s Need for Loans
Menu JTA Search

Finance Ministry Calls Conference Affirming Israel’s Need for Loans

Download PDF for this date

Israel’s Finance Ministry called a special news conference for the foreign press this week at which officials emphatically declared that Israel continues to need the $10 billion in U.S. loan guarantees.

The conference was apparently called to contain political damage from recent reports, in the Washington Post and elsewhere, that some Israeli political and economic figures believe the loans may not be needed for the intended purpose of absorbing immigrants.

“We can say without any hesitation,” said Finance Minister Avraham Shohat at the conference Wednesday, “we need it all if we want to carry out our plans” to absorb both immigrants who already have come to Israel and those yet to make aliyah.

The money is needed “to increase the infrastructure and to invest more money to create more jobs,” he said.

The Finance Ministry’s director-general, Aharon Fogel, was reported to have suggested the loan guarantees might be used to repay the country’s foreign debt rather than finance investment that would help stimulate the economy and absorb newcomers.

His spokesman subsequently denied the comments, and at Wednesday’s news conference, Fogel repeatedly stated that the loans are “very important to us.”

“They give us a much higher (credit) rating than any other growing country in the world,” Fogel maintained.

He said the resulting increased investment will be invaluable in aiding new immigrants, primarily by providing jobs.

“The main precondition for the absorption of immigrants is employment, and the main precondition for this is investment,” he said.

He stressed the loans would not be allocated by the government to specific investors or projects, but that their use would be determined by the private sector.

Alluding to his reported controversial remarks, Fogel attempted to explain that foreign debt would be restructured as a consequence of the loan guarantees.

The remark prompted Shohat to interject, “I want to emphasize there is no intention that this money will (be used) to change the debt structure.”


Earlier in the week, Prime Minister Yitzhak Rabin also issued a statement clarifying the government’s intended use of the guarantees.

“The government requires them for immigrant absorption,” said Rabin’s statement. “All (contrary) statements are counter to the needs of the state as the government views them and serve to cause damage to Israel, its relations with the United States and the issue of foreign assistance.”

Of the $2 billion in guarantees Israel is scheduled to receive this year, $600 million will be used to finance infrastructure investments by the government, said Bank of Israel Governor Jacob Frenkel in a recent interview.

The rest will be allocated to “activities which encourage the private sector in its investment-related operations,” Frenkel said.

Founding Funders

The digitization of the JTA Archive would not have been possible without the generous support of the following donors:
  • The Gottesman Fund
  • Righteous Persons Foundation
  • Charles H. Revson Foundation
  • Elisa Spungen Bildner and Robert Bildner, in honor of Norma Spungen
  • George S. Blumenthal
  • Grace and Scott Offen Charitable Fund