Move in Congress to Allow Israel to Refinance Part of Its Debt to the U.S.

A move to allow Israel to refinance part of its debt to the United States will be made in Congress, according to Sen. Lawton Chiles (D. Fla.).

Chiles told the Jewish Telegraphic Agency that he met with Israel Finance Minister Moshe Nissim Wednesday and told him he would make such a proposal to the Senate Appropriations subcommittee on Foreign Operations. The subcommittee’s chairman, Sen. Daniel Inouye (D. Hawaii), favors the proposal, Chiles said.

Israel owes the U.S. nearly $10 billion for economic and defense purchases. About $1 billion of the defense loans were taken out when interest rates were at 12 to 14 percent.

Chiles said that while details have not yet been worked out, his proposal would allow Israel to “prepay” the $1 billion by refinancing the loan in the private market at the current interest rates of 10 to 11 percent, thus saving millions of dollars. This is similar to what many people in the U.S. are doing on their loans, he noted.

Congress would be asked to guarantee most of the new loan, Chiles said.

He said he believes the proposal is “feasible” since Israel’s credit is good. However, he said the proposal still has to be worked out carefully since he does not want to set a “precedent” where other countries, who have not repaid their debts as faithfully as Israel, would ask for the same thing.

Chiles noted that Congress was “delighted” with the improvements Israel has made in its economy over the past several years. “I think they worked very hard and I think they did a very good job,” he said.

Nissim, who was in Washington for the annual meeting of the International Monetary Fund, met with other members of Congress before leaving for Israel.