State Comptroller's Report: State Assistance to Exporters Deemed Ineffective, Late

Even though the government recognizes the need for a program to aid exporters, objections by the Finance Ministry have offset the good intentions.

Disagreements between the treasury and Ministry of Industry, Trade and Labor, as well as delays in directives from the latter ministry have kept things from happening, according to the state comptroller's report issued yesterday.

The shekel strengthened against the dollar between early 2006 and mid-2008 by 28.5%. Exporters have been on the decline since early 2008 in terms of both orders and jobs.

In April 2007, Industry, Trade and Labor Minister Eli Yishai appointed a committee to examine ways to help exporters stung by the dollar crisis. In May the committee submitted its findings, which in July the Finance Ministry announced it was against. The treasury said the problem stemmed from the dollar's weakness worldwide, over which Israel had no influence.

Because of objections from the treasury, the Industry, Trade and Labor Ministry delayed submitting a proposal for the government's approval until November 2007, when the government decided that a program to assist exporters should be put together.

"Debate and decision on the matter could perhaps have been expedited," the state comptroller found.

The delays continued. The Finance Ministry procrastinated for three months over appointing representatives to the team implementing the plan. The team did not record its discussions, so it's impossible to evaluate the basis of its recommendations. Nor did the team specify parameters to be used in evaluating the program.

Even though the program was unsuccessful due to the relatively difficult requirements for participating exporters, it received an additional budget of NIS 70 million in March 2008 (an increase of 288%). Also, its conditions for loans to exporters were eased.

The changes did not substantially spur demand for loans, and the extra budgeting remained unused. The comptroller found that the efforts did not justify the dramatic budgeting changes.

In late 2008 it was decided that exporters would be offered loans for any purpose, instead of limiting them to cover marketing. The Ministry of Industry Trade and Labor, however, delayed its release of new directives, which it said stemmed from a disagreement with the Finance Ministry.

The comptroller found that because of exports' vital role in the Israeli economy, ministries should reassess the effectiveness of the assistance offered to exporters, particularly in light of the global financial crisis.