The Israeli government said today that the Reagan administration has agreed to an unprecedented postponement in the repayment of $500 million in Israel's debt to the United States, but this appeared to be disputed by statements from administration officials in Washington.
Reporting to the Israeli Cabinet on his talks with President Reagan and other administration officials in Washington last week, Prime Minister Shimon Peres said that debt repayments due in the coming weeks would be postponed for at least three months.
This would carry the issue over until Congress reconvenes in January and has an opportunity to consider whether to cancel any of Israel's more than $9 billion debt to the United States.
Israeli officials indicated that they would welcome such a move and strongly suggested that Reagan administration officials had indicated their support for a debt forgiveness program.
However, in Washington, spokesmen for the administration cast doubt on the firmness of the reported debt postponement commitment, which was disclosed in a communique issued by the Israeli Cabinet following a special meeting today.
A State Department official said that "there really was not talk of general debt rescheduling" during Peres' three-day talks in Washington last week.
A White House official added, "What we did was talk about things without commitments being made."
But in a telephone interview tonight, Nimrod Novick, the chief political adviser to Peres who accompanied the prime minister to Washington, said a commitment to delay the repayment of the $500 million for a least 90 days "is firm." Describing it as an "American idea" to ease Israel's mounting economic problems, Novick declined to say who first raised the suggestion within the administration but did not dispute that it was either Secretary of State George P. Shultz or the president.
However, an Israeli diplomatic source in Washington said, "The Israeli side did not react but just listened carefully. I would not characterize this as something like a very firm, formal proposal."
Novick said it is his understanding that two 90-day extensions of debt repayment is all the administration is authorized to approve without congressional consent. Before the initial 90-day extension expires, the newly elected Congress will have convened.
Asked if Israel will ask Congress to forgive a portion of its debt, Novick confirmed statements by officials in Washington that there is a division over this question within the Israeli government.
He said officials here oppose the idea of outright debt forgiveness as potentially damaging to Israel's international credit rating, while others argue that a reduction in its current debt load would boost Israel's ability to raise funds in the private market.
The reported delay in the debt repayment would be the first in the history of a country that has always prided itself on paying its creditors promptly and in full. But aides to Peres insisted that the idea was raised by the Reagan administration as a way to provide Israel with an additional form of economic aid during a period when Congress is not in session to appropriate new funds. Peres said before his trip to Washington that no form of debt forgiveness would be sought by Israel.
The debt issue arose on a day when the government's Bureau of Central Statistics confirmed to the Israeli public that inflation in the country has now reached record levels. The Bureau recorded that the Consumer Price Index rose by 21.4 percent in September slightly exceeding the previous record monthly rise of 21.1 percent set in October of last year.
Because of the compounding effect of monthly rises in the Consumer Price Index, the September increase meant that, projected on an annual basis, the inflation rate in Israel last month was 925 percent.
While Israeli officials praise the postponement in the debt repayment, they generally sounded a defensive note about the need to accept it.
"This is not a case that Israel cannot pay its debts and asks for a moratorium," said Communications Minister Amnon Rubinstein. "Maybe the Congress would reschedule our debts. It would give us some breathing space to put our house in order."
Coupled with other concessions that Peres won from the administration in Washington, the reported delay in the repayment would give Israel a sudden spurt of $1.7 billion in U.S. funds to shore up its foreign currency reserves for the next several months.
During the fiscal year that began Oct. 1 Israel will receive a total of $2.6 billion in U.S. assistance, the largest foreign aid package for any single country. The aid is composed of $1.4 billion in military assistance and $1.2 billion in economic assistance; for the first time it will be made up entirely of outright grants.
Previously, about half of the military aid given by the United States to Israel was in the form of long-term loans. It is these earlier military loans that make up the bulk of Israel's debt to the United States.
Israel's yearly debt repayment to the United States is about equal to the amount of U.S. economic assistance it receives annually. The net effect of providing all of the $1.2 billion in economic assistance immediately while postponing repayment of debts would be to swell Israel's foreign currency reserves.