Economic restrictions costing Israel NIS 2.3 billion a week, ministry says

Finance Ministry estimate assesses impact of current limitations, including shuttered commerce and education system

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

A man passes shuttered stores on Jaffa Street in Jerusalem on March 25, 2020 (Yonatan Sindel/Flash90)
A man passes shuttered stores on Jaffa Street in Jerusalem on March 25, 2020 (Yonatan Sindel/Flash90)

Finance Ministry chief economist Shira Greenberg has estimated the cost of the continued restrictions on the economy — where stores and schools are shuttered — at NIS 2.3 billion ($673 million) a week.

In a letter to Chezy Levy at the Health Ministry sent on Thursday, Greenberg said that the estimate takes into account the contraction in business activity, the drop in private consumption and state revenues, and the effects of the pandemic on global economic growth and trade.

Most of the damage to the economy, she wrote, stems from the restrictions still in place on commerce and trade. This alone costs the economy an estimated NIS 1.4 billion, she said.

By law, the Finance Ministry needs to report to the Health Ministry at the end of every month on the economic costs of the current restrictions, so that the coronavirus cabinet of ministers can have the data available when it makes decisions regarding the rules imposed to check the virus outbreak.

On Thursday, ministers in the coronavirus cabinet approved a plan for some students to return to elementary schools on Sunday, with all children in first through fourth grades attending for four days a week.

The ratings agency Moody’s Investor Services on Wednesday left Israel’s credit rating unchanged at A1, even as the economy has been battered by the virus. Moody’s estimated that Israel’s economy will contract this year by 5.5%, compared to 3.4% growth in 2019.

In 2021, the economy is forecast to grow by 6%, Moody’s estimated. The nation’s budget deficit will total 13% of GDP this year, compared to a 4% deficit in 2019, and the debt to GDP ratio will surge to 76.2% in 2020, from 60% in 2019.

As of Thursday, 966,802 Israelis were unemployed — almost a quarter of the workforce — including 613,690 who were put on unpaid leave, according to the Israel Employment Agency data.

Most Popular
read more: