Fischer: We Join OECD in May 2010

Israel can expect to become a full member of the Organization for Economic Co-operation and Development in May, Bank of Israel Governor Stanley Fischer said at a conference of ministry directors general in Jerusalem yesterday.

Fischer participated last week in an OECD hearing regarding Israel's macroeconomic situation. Israel's biggest gains from membership would be educational, he said: Israel would be forced to meet accepted norms in the developed world.

The organization has 30 members, including the 25 most economically developed countries.

Before Israel is accepted as a fully-fledged OECD member, the organization will hold a hearing, which is scheduled for March. The OECD will ask about progress Israel has made in fighting corruption, in terms of legislation and enforcement.

Israel has already decided that its representative to the OECD will be a special consul in Paris, not Israel's ambassador to France. Israel's OECD ambassador will be from the Foreign Ministry, and his deputy will from the Finance Ministry. The delegation will also include a representative of the Industry, Trade and Labor Ministry.

Sharon Kedmi, director general of the Industry, Trade and Labor Ministry, said that if the OECD accepts Israel and includes it in its investment committee, it will a 0.25% discount on the interest it pays on loans, savings $100 million a year.

Fischer said Israel now has an inbuilt surplus in its balance of payments - an odd situation for Israelis. In the past, this was an Israeli economic dream, he said. Fischer noted that the state budget for 2009 and 2010 is a very responsible one, and that Israeli exports, particularly high-tech, are recovering at an impressive rate - faster than imports. The government deficit may also wind up being less than 5% of the gross domestic product, even though its target is 6%.

The foreign currency surplus is creating upward pressure on the shekel's exchange rate, he said. Not everyone is happy with this new situation - when the shekel is worth more, it makes things difficult for exporters. The central bank governor noted that since Israel's debt-to-GDP ratio is now very similar to what it was in late 2008 - about 80%. In light of the fact that most developed countries saw their ratio soaring this year, Israel's international economic standing is improving. Meanwhile, Fisher said, the shekel's rating will improve, reducing interest rates for the state and Israeli companies.