Exit strategy: Israeli team presents 4-step plan for emerging from economic crisis

Economic team presents a four-stage plan, transitioning slowly out of restrictions, to revive Israeli economy. Treasury accepts the plan, despite objections from the Ministry of Health.

By Lauren Marcus, World Israel News

On Saturday evening, Israel’s Treasury accepted a four-stage coronavirus exit plan to revive the Israeli economy, presented by a specially commissioned finance committee.

The committee, made up of economists and financial experts from the Ministry of Finance, Bank of Israel, the National Council of Economists, and the Ministry of Economy, recommended that Israel slowly transition out of the current coronavirus restrictions in two-week phases, in order to kick start the economy while minimizing health risks to the public.

The committee recommended that high-tech and financial sectors ramp up first due to their high contribution to Israel’s GDP. In spite of the potential health risks, the committee also recommended that stores and malls also be opened relatively soon, albeit within limits.

“It is necessary to begin to restore the economy gradually, in line with the steps that will be implemented immediately after Passover, in order to prevent economic collapse and irreparable damage,” wrote the committee.

According to the outline recommended by the committee, the economic restoration will happen in four two-week stages. The transition from stage to stage will be subject to metrics set by the Ministry of Health.

In the first two weeks after Passover, from April 19 through May 3, the number of employees in the workplace will be raised to 50 percent (up from 15 percent currently) and a limited number of street shops and open-air shopping centers will return to business. Special education schools and kindergartens will reopen and the public will be able to leave their homes for reasons other than essential purchases.

In the second phase, from May 3 through May 17, half of elementary school students (grades 1-3) will return to class and malls and open air markets will reopen, under restrictions. In the third phase, which begins a month after Passover, starting May 17, recreational spaces that can maintain social distancing like gyms, nature reserves, libraries, and museums will be reopened. Densely crowded leisure spaces like stadiums, theaters and cinemas will remain closed.

In the fourth phase, from May 31st onward, all closed businesses will be opened. One subject that was not broached in the plan was resuming international flights to a pre-corona situation.

Encouraging the reopening of commercial businesses, the committee issued a warning to the government, writing that “harming the income of hundreds of thousands of low-income households with limited financial reserves could hurt the public’s willingness to comply with the health restrictions required to cope with the epidemic, especially considering the fact that disease risks are not uniformly distributed across all levels of the population.”

Deputy Director General of the Ministry of Health Professor Itamar Grotto spoke to IDF Radio Sunday morning about the exit plan, insisting that “We are still very far from anything like that.” During the last few weeks, Grotto has consistently taken a hardline approach to managing the pandemic. He was widely criticized for his stance after stating in a March Ynet News interview that “food stores will need to be shut down and the authorities will deliver rations to the public.”

The committee’s report described the depth of the damage to the economy due to the coronavirus pandemic. A Central Bureau of Statistics survey on March 31 showed that 42 percent of businesses lost more than 50 percent of their income since the outbreak of the crisis, and the major impact was felt by small and medium-sized businesses. More than 1 million Israelis, making up 25 percent of the country’s workforce, have filed for unemployment benefits.

The committee estimated that more than 400,000 people will remain unemployed after the restrictions end. Emphasizing the need for the economy to be restored as soon as possible, the committee wrote, “As the downturn continues and widens, the longer-term damage to the Israeli economy will increase, and the recovery rate will be hampered after the restrictions are lifted.”