New framework will administer the recently extended U.S.-Israel Loan Guarantee program.
On October 24, The U.S. and Israel signed a memorandum of understanding establishing a new framework for administering the recently extended U.S.-Israel Loan Guarantee program. This follows President Barack Obama’s July signing of legislation to continue the U.S. Loan Guarantee program, which will allow the U.S. to provide access to up to $3.8 billion in future loan guarantees to Israel as part of a $9 billion commitment made by the U.S. in 2003.
U.S. Treasury Secretary Tim Geithner and Israeli Finance Ministry Director General Doron Cohen signed a memorandum of understanding concerning the new framework. “These guarantees,” said Secretary Geithner, “combined with the effective management by the government of Israel have helped support Israel’s ongoing and strong economic recovery.”
The two officials signed this document in Washington at the annual meeting of the U.S.-Israel Joint Economic Development Group, or JEDG.
The U.S. began the loan guarantee program for Israel in 2003 to assist Israel during the global economic downturn. U.S. loan guarantees use the financial credibility of the U.S. to boost confidence for private markets lending Israel money. Because of this guarantee, the government of Israel is able to enjoy lower interest rates on loans made to them.
Due in part to this assistance the U.S. government offers, the Israeli economy has enjoyed strong economic growth, even during the recent global economic downturn. Israel has been able to keep inflation on target and has reduced the country’s debt in the past few years while expanding its exports.
"Israel appreciates the longstanding extraordinary support of the United States,” said Director General Cohen. “The JEDG and Loan Guarantees program have contributed to the security and stability of the Israeli economy, and the JEDG will continue to enhance the relationship between our countries."
“Israel is a vital partner and ally of the United States,” said Secretary Geithner, “and this is why the success of this [loan] program is so important to us.”