Bank of Israel loses billions

by Richard Kilner

Story link: Bank of Israel loses billions

Over the course of 2007 the Bank of Israel made a loss of NIS 5.3bn, contrasting sharply with its 2006 profits of NIS 83m.

The loss is down to the unfavourable dollar-shekel exchange rate.

Israel’s foreign currency reserves took a battering over the year, losing NIS 7.1bn as the dollar vaired over the twelve months.

The majority of Israel’s foreign currency reserves are in dollars, which saw a large fall of 9% over 2007.

By the end of 2007, the central bank’s deficit had reached NIS 20.8bn, although most of that was accrued eight or nine years ago.

At the end of 2006 the Bank of Israel had a balance sheet of NIS 158bn, but this fell by 16% to the end of 2007, at just NIS 133bn.

In the past, the Bank of Israel made a profit and the transferred the surplus to the Israeli government, allowing for increased government spending.

Given the large loss this year, any profits made in the near future would probably be spent offsetting the loss.