The Knesset early Tuesday passed an amendment that will allow the country to increase its budget and deficit in order to finance a NIS 90 billion ($25 billion) economic rescue package to help overcome the coronavirus crisis.
The bill passed by 62-0, relying on three votes from the Arab-majority Joint List to scrape over the line. The Blue and White faction, which is in talks to join a unity government, also supported the bill.
Prime Minister Benjamin Netanyahu and Health Minister Yaakov Litzman were not present as both are in quarantine after Litzman was diagnosed with the virus and Netanayhu had been in contact with him.
The right-wing Yamina party, which is part of the coalition, was also not present for the vote in an apparent protest over the direction of the unity talks with Benny Gantz’s Blue and White.
The bill that passed was an emergency amendment to Israel’s Basic Law on the State Economy, which will allow for “adapting the budget ceiling and limits on monthly expenditure in order to deal with the coronavirus crisis and financially assist the citizens.”
Joint List MK Ahmad Tibi said that with so many missing MKs, the Likud found themselves short of a majority and begged his party for help, noting the irony that the ruling party had repeatedly sought to portray Joint List votes as illegitimate because they were not Zionist and accused some of the party members of supporting terror.
“We are still in the building. There are only 58 MKs. They need 61 to pass the Basic Law on the State Economy. “Don’t go please,” they said to us. The Likud is asking for the Basic Law to pass with the votes of “terror supporters,” Tibi tweeted before the vote.
After the vote passed, Tibi tweeted a photo of himself, together with fellow Joint List MKs Aida Touma-Sliman and Osama Saadi with the caption: “NIS 90 billion passed with 62 votes. It passed with three votes from the Joint List (Osama, Aida and Ahmad), 62-3 = 59 and then it would not have passed. Oops.”
Among the measures included were NIS 500 shekel ($150) stipends for children (up to a maximum of 4 per family,) NIS 950 shekel ($265) stipends for the elderly and increased unemployment benifits.
It also included expanding the framework of the national deficit by NIS 40 billion ($11 billion.)
Despite the Knesset passing the law, it was unlikely that most of the stipends and unemployment benefits would reach the public before the Passover holiday that begins Wednesday evening, Israel’s National Insurance Institute director general announced over the weekend, saying it was overloaded by the massive surge in claims.
“Unfortunately and despite great efforts, we will not be able to meet the schedule and deliver the unemployment benefits,” Meir Spiegler told Hebrew daily Maariv, adding that while he hoped that emergency stipends for children may be processed before the holiday, those for the elderly definitely won’t be.
The package passed early Tuesday is part of a raft of measures aimed at helping Israel weather the damage to the economy from the corinavirus restrictions.
The Bank of Israel announced Monday it was cutting interest rates to 0.1 percent, to help the coronavirus-battered economy weather the crisis. It will slash the rate by more than half from 0.25%.
The move follows other similar rate cuts in the US and around the world, which have generally caused temporary jumps in the stock market.
The rate matches the lowest ever and brings the bank back to where it was from 2015 until 2018, when it sought to spur lending to ease a housing crisis.
The bank said the crisis caused by the coronavirus pandemic has “led to a shock in capital markets in Israel and worldwide, with steep declines in equity prices and an increase in volatility and risk.”
It said GDP contracted by 5% in the first quarter of 2020, and 5% negative growth is predicted for the next quarter as well. Debt-to-GDP ratio was predicted to reach 75% in 2020.
In another move aimed at spurring lending and jump-starting the economy, the BoI announced it will offer banks three-year loans at a fixed rate of 0.1%, so long as the banks extend loans to “small and micro businesses.” Some NIS 5 billion ($1.3 billion) will be set aside for the loan scheme, the Kan public broadcaster reported.
Since the beginning of March, the government has instituted increasingly severe measures in an effort to contain a spread of the deadly novel coronavirus. Israelis have been ordered to stay at home, only venturing out for essential needs. Those who can work from home are able to continue to do so, but many of those who cannot and are not employed in essential jobs have been placed on leave without pay. As the economy has slowed down unemployment figures for the first time ever spiked past 1,000,000 at the beginning of the month, bringing the unemployment rate to 25%.
The bank said that if Israel starts to roll back restrictions by late June, the economy will likely rebound and see growth in 2021. However, it predicted that will take until late 2021 for unemployment numbers to return to pre-crisis levels of around 3.3%.
It warned that “there is considerable uncertainty regarding the forecast, in view of the lack of clarity about the length and magnitude of the crisis.”
According to figures released Sunday by the Israel National Employment Service, there are currently 1,050,000 unemployed people in the country.
Since the beginning of March some 887,283 people registered for unemployment benefits, of whom 89% are on unpaid leave, the Service said.
The coronavirus has claimed the lives of 56 people in Israel as of Monday afternoon, with over 8,600 people confirmed to be carriers of the virus.