Netanyahu clears $2.8 billion aid to counter coronavirus economic crisis

The aid will help Israel weather the economic crisis brought on by the health scare surrounding the virus.

By Paul Shindman, World Israel News

Prime Minister Benjamin Netanyahu on Wednesday announced a $2.8 billion economic aid package to bolster sectors of Israel’s economy that are starting to suffer from coronavirus fallout.

“This is a challenge we believe we can manage in order to eventually get through it safely,” Netanyahu said at a press conference at his office in Jerusalem where he was accompanied by the heads of the Israel’s financial infrastructure including Finance Minister Moshe Kahlon, Minister of Economy Eli Cohen and Amir Yaron who is the Governor of the Bank of Israel, Israel’s equivalent to the Federal Reserve Board.

“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,” Netanyahu said.

In order to check the spread of the virus in Israel, the country has already placed severe travel restrictions that have hit the travel industry, a mainstay of the economy, a severe blow.

This week the Ministry of Health announced that all foreign visitors to Israel will have to go into two-week quarantine, a condition that is expected to virtually shut down the vital tourism sector. Multiple airlines have already curtailed flights to Israel affecting not just tourism, but large swathes of Israel’s production.

No food shortages are expected since most imported goods comes by sea, with international shipping currently not affected by the worldwide health crisis. However, 60% of the Israel’s exports are sent on passenger flights — now almost completely grounded, Calcalist reported.

Also on Wednesday, El Al Airlines placed a whopping 80 percent of its 6,300 strong workforce on unpaid leave including 90 percent of its pilots, Globes reported. Hundreds of El AL workers are already in home quarantine and unable to work while those El Al pilots still flying offered to take a 20 percent salary cut to help the airline.

The financial package gives a boost to the $1 billion loan package for businesses that was announced Sunday. The allocation doubles the low-interest loans for businesses, gives $280 million to the healthcare system and a similar $280 million for public services that will be stressed including the police, national fire department and the Israel Prisons Service.

Kahlon admitted that the country is “in a difficult period,” saying the conditions were unlike anything the country had encountered in the past. He said that changes would be upcoming to the National Insurance Institute that makes unemployment payments.

Tens of thousands of Israelis are now under mandatory two-week house quarantine, many of them in jobs that are unable to be performed from home.

Earlier this week, Bank of Israel Governor Prof. Amir Yaron met with the heads of Israel’s seven banks and cautioned them to take it easy with businesses squeezed into financial stress by the coronavirus crisis.

“The banking system is strong, and it is essential that the banks know how to find a balance between responsible credit policy and the financing needs of the economy — particularly in relation to the business sector, with an emphasis on small and mid-sized businesses,” Yaron said.

The government’s Supervisor of Banks, Dr. Hedva Ber, noted that Israel’s banks currently have $4 billion in surplus capital and said they “can therefore continue providing credit to good companies that encounter cash-flow difficulties due to the situation.”