Israel to Join OECD in Spring 2010, Say Officials

Israel is on the last lap for joining the Organization for Economic Cooperation and Development, according to Israeli officials.

In 2010, its secretary-general, Angel Gurria, will be visiting Israel and present two comprehensive reports - on Israel's economy and the second on employment and unemployment here. He will then participate in a special meeting of the economic cabinet.

In March 2010, senior OECD officers and Israeli officials will review Israel's implementation of the treaty for prevention of corruption. Then in April or May the organization's ministerial council is expected to make a formal announcement of Israel's membership.

The OECD is an organization of the world's 30 most economically developed countries. The organization's primary aim is to achieve a high rate of sustainable economic growth in each of its member states.

The group requires a commitment from each member to two basic principals: to prevent discrimination between citizens and non-citizens, and to ensure there is no regression from liberalization.

Several of the world's leading economic players are not members of the OECD, notably China and India, as they fail to meet its basic criteria.

An impressive delegation on behalf of Israel, headed by Bank of Israel Governor Stanley Fischer, appeared on Monday for a hearing of the organization's macroeconomic committee. The delegation responded to the organization's most recent draft of a 100-page book on Israel's economy.

The OECD's document recommends Israel retreat from its long-term policy of increasing its national budget by 1.7% annually to a multiannual policy aimed at reducing the debt-to-GDP ratio from its current level of about 80% to around 60%.

In addition, the organization recommends that Israel's income tax and corporate tax not be reduced in the immediate future, as is planned. Also, the organization thinks that Jerusalem should consider increasing VAT - value added tax.

The document also contains a recommendation to cut purchase tax on new vehicles, and to replace the Finance Ministry's regulation of the capital market and insurance by a body without political affiliation.

In the monetary sphere, the OECD indicates that the Bank of Israel's intervention in the foreign currency market has accomplished what it needed to accomplish, and should be abandoned.

Fischer, who enjoys no little prestige within the organization, explained Israel's economic policy, the reasons why the global economic crisis relatively had a limited effect here and outlined the government's policy for 2010.

The OECD can neither force its policy on Israel nor seeks to as an organization of 30 separate countries, and the document is simply a basis for discussion and persuasion.