Financial services

UPDATE 1-Israel to spend 80 bln shekels to help economy cope with coronavirus crisis

JERUSALEM (Reuters) – Israel will spend 80 billion shekels ($22 billion) to help the economy weather the coronavirus crisis and the finance minister said he expected a gradual return of business activity after the Passover holiday next month.

Israel’s economy has been hard hit by a government lockdown aimed at curbing the spread of the coronavirus. Increasingly stringent restrictions have largely confined Israelis to their homes, forcing businesses to close and causing unemployment to rocket.

Prime Minister Benjamin Netanyahu announced a further tightening of restrictions late on Monday, barring gatherings of more than two people who are not in the same family, with few exceptions, such as for funerals.

The aid package, unveiled by Netanyahu and Finance Minister Moshe Kahlon, includes 70 billion shekels in addition to 10 billion already promised to boost welfare services for those who have lost their jobs or are on unpaid leave and to assist the private sector.

“The coronavirus has brought the country’s worst ever economic crisis,” Kahlon said.

The number of people seeking unemployment benefits has surged to about 1 million people in less than a month, up from a pre-crisis level of 30,000 unemployed, he said.

“Our job is to formulate as significant and broad response as possible to address the damages from the crisis, and that is what this package is for,” Kahlon said.

That includes a 20-billion-shekel social safety net, including stipends for those who lost income, 40 billion shekels earmarked to assist businesses with tax breaks, loans and other services, about 10 billion for the healthcare system and nearly 8 billion will be spent to speed up the recovery.

Kahlon said he estimated the economy “would return, albeit gradually” to normal activity after the Passover holiday, which ends mid-April.

Bank of Israel Governor Amir Yaron, who has said the crisis had arrived when Israel’s economy was in a strong position, said the stimulus package would reduce uncertainty.

The central bank has projected an economic contraction of 2.5% in 2020 as long as the nationwide lockdown eases by the end of April.

($1 = 3.5655 shekels)

Additional reporting Steven Scheer. Editing by Jane Merriman


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