Showing concern over credit matters for the Israel diamond industry, Israel Diamond Manufacturers Association (IsDMA) President Moti Ganz has approached the Bank of Israel to extend financial support to the country’s diamond industry, which is the largest export industry in Israel.

He wrote a letter to Prof. Stanley Fischer, Governor of the Bank of Israel, proposing that the Bank should establish a $2.25 billion credit fund for the diamond industry out of the central bank’s foreign exchange surplus. The credit would be made available to diamantaires through the banks financing the industry – Union Bank, Israel Discount Bank, Bank Leumi, First International Bank and Mizrahi Tefahot Bank. Also, diamantaires would continue to pay individualised margins according to the company’s level of risk, but would save the cost of raising the funds (LIBOR).

Ganz also noted that banks should reduce the burden of margins charged to diamantaires to the level of January 2008 – between 1 and 3 percent, since banks have raised margins unilaterally by 0.25 to 1 percent from the beginning of the financial crisis the. Stiff competition was leading to the industry allowing buyers a credit period of 120 to 160 days.

Ganz showed unhappiness towards the Israeli banks having seriously reduced the credit available to the industry, since the start of the financial crisis, the. “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.” wrote Ganz. He added that the number of bankruptcies in the industry is minimal, not exceeding more than one or two a year. This, he stated, attests to the financial strength of the industry and its stability. The Israel diamond industry noted a polished exports in 2007 to the tune of over $7 billion (about 20 percent of the country’s total industrial exports), and with a net turnover of $20 billion.

Ganz concluded that the diamond industry was not a cause of the current economic crisis, yet is being forced to deal with its serious consequences daily. “We are the only industry in Israel that has not leveraged itself, has not issued bonds to the detriment of the economy,” he wrote.