ZIM cargo ship 311.
(photo credit: Courtesy)
The government is extending a program to help small and medium-sized exporters
receive insurance to protect against the risk of nonpayment by foreign buyers or
political instability, the Finance Ministry announced Sunday.
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overcome the global economic crisis better than other countries, helped by
partial government intervention as necessary,” Finance Minister Yuval Steinitz
“As a small export country we need to assess the
repercussions of the crisis on global markets and continue to act through the
implementation of relevant programs for the good of the economy.”
of the export aid program, which was extended for another year, is to enable
exporters to increase their credit framework for export insurance by having the
government share some of the risk through state guarantees.
terms of the program, an exporter can add an additional 10 percent to 50% in
relation to the basic quota provided by the insurer for each overseas
The program works by having the state participate in the
bearing of marginal risk – the risk that the insurer is unwilling to
When an insurance company enters into a contractual relationships
with an exporter, the government acts as the reinsurer for the insurance
company, so that the government’s insurance will apply to the buyer’s
The insurance is provided for the purpose of protecting against
the risk of nonpayment to the Israeli exporter by an overseas buyer, or of
protecting against political risk.
Since the program was introduced in
June 2009, the number of export deals have grown an accumulative $435.4 million,
the Finance Ministry said.
The Finance Ministry introduced the program to
help exporters who were hit hard by the global economic crisis. It provided NIS
4 billion in reinsurance to private credit-insurance companies in the form of
state guarantees. The program was scheduled to end December 31.
Finance Ministry also announced it would extend state-backed credit for
medium-sized businesses with annual revenues of less than NIS 80m. The credit
fund for medium-sized businesses, which was established in February 2009, helps
businesses receive loans.
The fund is operated through Bank Otsar
Hahayal, Mercantile-Discount Bank and Bank Hapoalim. Some 500 loans worth about
NIS 1.5b. have been approved so far.
The volume of exports dropped 2.5%
in real terms in the October-November period, following a decline of 1.7% in the
third quarter and 3.2% in the second quarter, the Israel Manufacturers
Association reported Sunday.
“The economy’s main growth engine is in
trouble,” Israel Manufacturers Association president Shraga Brosh said Sunday.
“Israeli exports are in danger as the dollar continues to weaken and the price
of raw materials is hurting profits, while prices can’t be raised when global
markets are still depressed.
“The crisis in 2009 started with a sharp
fall in exports and ended with tens of thousands of layoffs. I call upon the
government to carefully examine ways to strengthen the competitive power of
Israeli exports rather than seeking ways to even further boost government