The cabinet on Sunday backed a plan by Prime Minister Benjamin Netanyahu and Finance Minister Israel Katz to inject another NIS 14 billion ($3.9 billion) into the economy to make up for losses caused by the coronavirus and the lockdown measures ordered to curb its spread.
The funds will help struggling businesses and are also earmarked for projects to encourage employment.
With the added cash, the government recovery program now stands at some NIS 100 billion ($28 billion).
“This is an essential step in the process of coping with the crisis we find ourselves in, for the citizens of the State of Israel and for the rapid reduction of unemployment in the country,” said Katz in a statement.
Katz recently switched from the foreign to the finance ministry, under the new unity government deal.
Of the additional funding, some is intended to increase the size of a fund granting loans to small and medium-sized business from NIS 8 billion ($2.2 billion) to NIS 14 billion. Another NIS 2 billion ($556 million) will go to support hi-tech businesses, while NIS 750 million ($212 million) is for government guarantees to cover credit for suppliers.
The cabinet also approved a decision to supply NIS 6 billion ($1.7 billion) to reduce unemployment by providing incentives for businesses to rehire workers who lost their jobs due to the lockdowns. The program has been stalled over disagreements between business associations and the finance minister over how to implement the idea without inadvertently providing employers with a motive to fire their workers in order to qualify for the grants, if there is a second wave of virus infections.
Another fund is also to be set up for businesses that have been refused loans by banks because they are considered too risky in the current period due to the coronavirus outbreak and the impact it has had on public life.
Israel has seen escalating protests by self-employed workers and small business owners against what they have deemed the government’s insufficient economic response in helping them survive the pandemic. Large chain operators have also demanded help from the government.
Virus lockdown measures, which began in mid-March, brought the economy to an almost total standstill. Unemployment figures leaped from a record low of four percent at the beginning of March to over 25% at beginning of April, as many businesses were forced to close their doors while the public was ordered off the streets.
As a result, the number of unemployed surpassed 1,000,000 for the first time in Israel’s history, with many employees put on unpaid leave.
As the government began to ease restrictions, the National Employment Service reported at the beginning of the month indications that more people were returning to work than were joining the unemployed.