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Bank of Israel Governor David Klein arrived in Washington yesterday, and Finance Minister Silvan Shalom will arrive on Friday, for the annual conference of the International Monetary Fund and the World Bank, under the shadow of a possible downgrading of Israel's sovereign rating by international credit rating agencies in October. The three-day conference begins Friday. Klein and the Bank of Israel delegation left earlier for Washington and began a series of meetings in the U.S. capital. Both the central bank and treasury delegations have arranged meetings with key people at the ratings agencies Moody's, Standard and Poor's and Fitch. The Israel representatives will try to prevent a reduction in the state's sovereign credit rating by one or more of the agencies. Fears have increased in recent days amid hints from Washington that the agencies may downgrade Israel in October due to the worsening security situation, the events in the Muqata, and this week's Security Council resolution. Israel has received indications from New York and London that the agencies are closely monitoring events and are concerned by the deterioration in some of Israel's most important corporations, including the increasing weight of doubtful debt on the banking sector. Also, ostensible signs of economic stabilization have been recently refuted by updated economic indicators recently published by the Central Bureau of Statistics. Klein and Shalom, and senior aides such as the Accountant General Nir Gilad and deputy bank chief Meir Sokoler, will try to convince the heads the most important rating agencies and largest investment banks that there has been no change in Israel's economic situation. They will insist the country remains stable and that the Knesset will ratify the 2003 state budget. Gilad told Ha'aretz on Sunday that no deterioration is expected in the near future in Israel's credit rating, and that the international agencies will wait for the coming parliamentary vote on the budget. Jerusalem sources said yesterday that the security and economic events of the past few days did not help Israel. The annual meeting of the IMF and the World Bank is one of the most important economic conferences of the year, although it was canceled last year because of the September 11 terrorist attacks on America. It includes discussions on matters dominating the global economic agenda, and central bank governors and finance ministers from all over the world attend. Among many subjects to be discussed this year are global growth trends for the coming year and the future of the technology sector. Along with formal discussions, the conference is important in bringing together the entire Western economic leadership. Israel considers it an important opportunity to meet outside the formal settings with influential figures in the ratings agencies and other significant institutions. After the conference, the treasury delegation will spend four days in New York for a series of important meetings with heads of major investment banks Merrill Lynch, Goldman Sachs and the heads of Moody's and Standard and Poor's. In the meetings, further efforts will be made to convince analysts not to hurt Israel's current economic standing. Gilad has a long-standing warm relationship with Moody's.

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