Treasury unveils NIS 80 billion rescue plan for virus-stricken economy
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Economic activity expected to slowly return after Passover

Treasury unveils NIS 80 billion rescue plan for virus-stricken economy

Announcing retirement, Finance Minister Moshe Kahlon says NIS 60 billion of largest-ever package to help businesses and others affected by pandemic; protesters push for more

A restaurant owner outside shuttered shops in the Old City of Jerusalem, on March 30 2020. (Olivier Fitoussi/Flash90)
A restaurant owner outside shuttered shops in the Old City of Jerusalem, on March 30 2020. (Olivier Fitoussi/Flash90)

Finance Minister Moshe Kahlon on Monday announced an economic rescue package worth NIS 80 billion (approximately $22.5 billion), the largest in Israeli history, saying he believes that economic activity will gradually resume after next month’s Passover holiday.

“We won’t let the economy collapse,” Kahlon said as he detailed the steps that would be taken to strengthen the economy and help those whose jobs and businesses have been lost or threatened as a result of the coronavirus pandemic.

The Employment Service said Monday over 800,000 Israelis have signed up since the beginning of March, bringing the national unemployment rate to 23.1 percent.

“I know that sadly it won’t return things to how they were. But we are still talking about the most meaningful plan in Israeli economic history,” Kahlon said.

View of the empty Mahane Yehuda market in Jerusalem on March 29, 2020. (Nati Shohat/ Flash90)

The plan came as Prime Minister Benjamin Netanyahu announced updated emergency regulations, which call for paring economic activity in Israel to just 15% of normal levels, down from the current 30%, forcing more workers to remain at home.

Finance Ministry officials have resisted a full lockdown on movement, warning Netanyahu of dire consequences for the economy. The ministry has clashed with officials from the Health Ministry who have for weeks advocated the strictest of measures.

Some 5,000 self-employed people and small business owners protested in Jerusalem hours ahead of the announcement of the plan, saying the proposals would not prevent the collapse of small- and medium-sized businesses and that proposed payments to independent workers would not cover the expenses of many, leading to massive financial hardship.

Self-employed and small business owners participate in a rally in Jerusalem on March 30, 2020. (Yonatan Sindel/ Flash90)

Police eventually dispersed the protesters, after they were no longer able to maintain the regulatory two-meters distance between individuals, due to the large number of people who attended the demonstration, the Globes financial newspaper reported.

The first set of measures announced by Kahlon on Monday was NIS 20.6 billion ($5.77 billion) to widen the parameters for those eligible to receive social security.

Measures within that package included a scheme whereby anyone aged 67 and over who lost their jobs as a result of the pandemic would receive a grant of up to NIS 4,000 ($1,121), in addition to their state pensions for March and April.

Israeli police officers close shops following the government decision, at the Carmel market in Tel Aviv, on March 22, 2020.(Avshalom Sassoni/Flash90)

Kahlon also announced grants totaling NIS 3 billion ($841 million) to go toward monthly payments of up to NIS 6,000 ($1,681) this month, and up to NIS 8,000 ($2,242) next month, for self-employed persons aged 28 and over who meet the relevant criteria according to taxable income from the business and the household. Those criteria were not announced.

In addition, the period of time working required before an individual can file for unemployment benefits was reduced from a year to six months and there is to be a NIS 200 million ($56 million) program to retrain those who lost their jobs

Kahlon announced that in the second part of the plan, NIS 11 billion (about $3 billion) had been allocated to strengthening the health system and for the civic response to the virus.

Medical team members at the Barzilay hospital, in the southern Israeli city of Ashkelon, wear protective gear, as they handle a coronavirus test sample on March 29, 2020. (Flash90)

This money is designated for expenditure on the purchase of 20 million coronavirus tests by the end of the year; the purchase of ventilators, masks, protective gear and additional medical equipment; increasing the country’s drug inventory; costs of additional medical personnel; costs of isolation complexes in hotels and hospitals; increasing the number of hospital beds for coronavirus patients and strengthening the laboratory and emergency services.

Prime Minister Benjamin Netanyahu (right) and Finance Minister Moshe Kahlon, in Jerusalem, on March 11, 2019. (Aharon Krohn/Flash90)

In addition, money will be earmarked to protect vulnerable sectors of the population and to help them remain isolated via the creation of an infrastructure to provide them with food.

The third section of the plan set aside NIS 40.7 billion ($11.4) for business grants, including reductions in business tax rates and a three month period without having to pay municipal taxes, water and electricity rates for affected businesses. There will also be financing solutions and expanded assistance for small- and medium-sized businesses through the state loan fund.

In addition, some licenses and permits will automatically be extended and new regulations that will cost the business sector will be halted, Kahlon said without providing specific details.

A general view of closed stores on Jaffa Road in downtown Jerusalem on March 26, 2020. (Yonatan Sindel/Flash90)

In the fourth part of the plan, NIS 7.7 billion (some $2.2 billion) was allocated to accelerate the economy via infrastructure projects and programs to boost the economy by improving online access to digital resources, including online learning

The program announced Monday is a NIS 70 billion ($19.6 billion) extension to the initial plan that designated NIS 10 billion ($2.8 billion) — with NIS 2 billion ($560 thousand) for the health system and civic needs and NIS 8 billion ($2.24 billion) in loans for small- and medium-sized businesses.

Kahlon also officially announced that he will be leaving politics when a new government is sworn in. He had been expected to step down and is no longer a Knesset member, after not running in the March 2 elections.

Kahlon was a long time Likud lawmaker before going his own way and heading the Kulanu party in the 2015 elections, after which he became finance minister. Kulanu was absorbed into Likud after a poor showing in the first of three elections over the past year.

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