The Israel Diamond Manufacturers Association (IsDMA) is calling on the Bank of Israel to create a $2.25-billion credit fund to help the Israeli diamond industry through the economic crisis.
In a letter sent late last month to Stanley Fischer, governor of the Bank of Israel, IsDMA president Moti Ganz urged him to use the central bank’s foreign exchange surplus to set up the fund. The money would be made available to diamantaires through the Union Bank, Israel Discount Bank, Bank Leumi, First International Bank, and Mizrahi Tefahot Bank.
In addition, Ganz asked Fischer to reduce the margins charged to diamantaires to January 2008 levels, which were between one and three per cent.
“This increase is a major burden to the industry,” Ganz wrote, adding banks have raised margins by 0.25 to one per cent since the financial crisis hit, while reducing credit available to the industry. Stiff competition among diamantaires over the past few months has forced them to grant buyers credit of 120 to 160 days, he added.
“The Israeli diamond industry’s total debt to the banks is about $2.3 billion, a level it has maintained for several years despite an impressive growth in exports,” Ganz wrote. He said the diamond industry did not cause the economic crisis and should not be made to suffer the consequences of the actions of others.
Israel’s diamond industry is the country’s largest export, with polished diamonds reaching more than $7 billion in 2007—about 20 per cent of the total industrial exports.
