World Bank to Issue Shekel Bonds

SINGAPORE - The Governor of the Bank of Israel, Stanley Fischer, met yesterday with senior officials of the World Bank's business arm, the International Finance Corporation (IFC), to discuss their request to issue bonds in Israel to finance the bank's activities around the world. The meeting took place in Singapore during the International Monetary Fund's (IMF) conference.

This is the first time that the bank's private sector arm plans on rasing funds in Israel. The 20-year bonds will be denominated in shekels, and will not be linked. IFC will convert the shekel proceeds to dollars for use around the world.

IFC is a subsidiary of the World Bank Group, and raises funds throughout the world - and then lends the money to needy countries.

The initial bond issue is planned for between half a billion to 1 billion dollars. The interest rate will be quite low as the bonds will have the very high rating of AAA.

The issue is considered a vote of confidence in the stability of the Israeli economy, and will help to develop the local bond market in light of the increased supply of bonds - and from such a respected institution.

Yesterday Fischer had the honor of opening the conference's seminar program. It was the first time an Israeli representative had been given such an important honor.

He spoke and moderated the first seminar on the reforms needed in the Chinese and Indian economies. Discussions of the two giants and their affects on the world economy are a major focus of the entire conference.

Fischer will participate in a number of other seminars, as well as meet with analysts from the international ratings agencies.

He is expected to emphasize the enormous stability and strength of the Israeli economy. Despite a series of crises since Benjamin Netanyahu's resignation from the post of finance minister - Sharon's illness, Israeli elections, the rise of Hamas, and the big shock of the war in Lebanon - the financial markets in Israel suffered a shock, but quickly returned to stability, explained Fisher.

Fischer is expected to tell analysts that everything depends on the budget, which is the best that can be achieved under the present circumstances; and if it is passed without changes then Israeli economic stability will be maintained.