The government announced an emergency package of more than NIS 10 billion ($2.8 billion) Wednesday, as it sought to stabilize the economy and offset some damage caused by the coronavirus crisis.
Some NIS 8 billion ($2.2 billion) will be dispersed to businesses, NIS 1 billion ($281 million) to the health system, NIS 1 billion to stem the spread of the virus and an unspecified amount would go to the aviation industry, Prime Minister Benjamin Netanyahu said.
The premier said the package would “allow the economy to continue to function.”
“The coronavirus has a heavy economic impact on the global market, and on our own,” Netanyahu said. “The state of the Israeli economy is better than most world economies. The financial system is strong and unemployment is low. These are big advantages in entering this crisis. This is a challenge we believe we can manage, in order to eventually traverse it safely,” he said.
Netanyahu on Sunday pledged NIS 4 billion in aid, which he said had been dispersed already. The remaining NIS 6 billion would be dealt out immediately, he said.
Any business that was hit by the virus could request money from the fund.
Netanyahu said he does not expect a shortage of goods in the country over the heavy flight restrictions as the majority of goods arrive by sea and “we’ll make sure that is not harmed.”
Finance Minister Moshe Kahlon said additional measures would be announced next week if deemed necessary.
Netanyahu made the statements at a press conference alongside Kahlon, Minister of Economy and Industry Eli Cohen, and Bank of Israel head Amir Yaron.
The aviation and tourism industries have been especially hard hit by the virus. A sweeping quarantine directive announced Monday requiring all incoming travelers to self-isolate is expected to essentially shut down tourism to Israel.
El Al has axed hundreds of employees, slashed salaries and is reportedly set to request a $700 million government loan to survive the crisis.
With fewer Israelis traveling abroad, an increase in domestic tourism may offset some losses from foreign tourists, though there are signs some Israelis may be wary of domestic travel and staying at resorts with thousands of others as well.
Small businesses are also likely vulnerable to temporary disruptions in sales and supply chains.
The Ministry of Finance’s chief economist, Shira Greenberg, said the quarantine orders announced this week would likely cost the economy NIS 4.3 billion per month.
The Bank of Israel on Monday said it expects the outbreak to cause a loss of 0.7 percent to Israel’s growth, shrinking GDP growth in 2020 to some 2%. The bank made the announcement before the sweeping quarantine order.
Israel’s banking system has not been hit hard by the crisis and is prepared for a further downturn, Yaron said, commending the banks’ response thus far.
Yaron gave no indication that the bank would cut interest rates, but recommended that banks make credit more available. Israel’s banks have some NIS 14 billion (some $4 billion) in surplus capital, he said.
The Tel Aviv Stock Exchange plummeted in recent weeks alongside global markets, with the TA-35 index dropping 19.76% since the beginning of the year.
There have so far been 77 confirmed cases of COVID-19 in Israel, most of them contracted by travelers returning from abroad. The government has for weeks ordered measures to clamp down on foreign entries and force home quarantines.
Some have criticized the measures as draconian and diplomatically harmful, but officials have defended them as helping keep the virus at bay. Some 22,000 Israelis are already in quarantine, the Health Ministry said Monday.
Unlike other quarantine orders, which were open-ended, Netanyahu said the new restrictions on all foreign entries order would be in place for two weeks, though it is expected to be extended. He added that further decisions were being made by the government to protect the economy, though he did not elaborate.