Netanyahu set to consider business rescue plans

"Our estimate is that 20% of all the employees who have exited the workforce will not return to their place of work."

By EYTAN HALON
Prime Minister Benjamin Netanyahu at a cabinet meeting on March 8, 2020 (photo credit: MARC ISRAEL SELLEM)
Prime Minister Benjamin Netanyahu at a cabinet meeting on March 8, 2020
(photo credit: MARC ISRAEL SELLEM)
Finance Ministry director-general Shai Babad will present an emergency financial assistance plan to Prime Minister Benjamin Netanyahu on Thursday, aiming to rescue businesses severely impacted by the coronavirus outbreak.
While Babad refused to share details with the Knesset's Finance Committee on Thursday morning, Channel 13 reported that Netanyahu is set to choose one of two plans developed by the Finance Ministry.
According to a "narrow" plan written by the ministry's Budgets Department, businesses and self-employed workers will be provided additional government-backed loans worth billions of shekels, similar to a model rolled out during the 2008 financial crisis. Businesses forced to close will be exempt from paying municipal tax for several months, in a move worth NIS 1.5 billion, and local authorities will receive compensation for losses associated with the decision.
An alternative, wider plan has reportedly been developed by National Economic Council chairman Prof. Avi Simhon and MK Nir Barkat. According to the reported plan, loans will be replaced with grants worth billions of shekels per month.
Babad told the Finance Committee that the ministry has already provided NIS 40b. in economic aid to combat the crisis, including NIS 10b. for individuals seeking unemployment benefits, NIS 8b. in low-interest loans for small and medium-sized businesses, and regulatory relief measures valued at NIS 20b.
Describing the outbreak as "one of the biggest, if not the biggest crisis" since the founding of the state, Babad presented the financial impact of a range of containment scenarios. A partial shutdown of the economy for five weeks would increase the fiscal deficit to 6.5%, while a full shutdown of the economy for as long as 12 weeks would
increase the deficit to 15.5%.
Demonstrating the financial impact of the outbreak, the Israeli Employment Service said the unemployment rate had risen from 4% before the crisis to 20.4% as of Thursday morning.
The total of unemployment benefit claimants currently stands at nearly 848,000, including over 690,000 new applications since the start of March. Some 90% of new applicants are employees placed on unpaid leave.
"We are closely watching how the additional restrictions to combat the coronavirus will impact the labor market, and we are already preparing ourselves for the next stage - the gradual return of the economy to full operations," said Employment Service director-general Rami Gagor.

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"Our estimate is that 20% of all the employees who have exited the workforce will not return to their place of work."
 
 


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