The plan presented by the prime minister and finance minister on Monday evening is one of the most audacious plans in the world. Last Friday, US President Donald Trump detailed an emergency plan accompanied by an injection of $50 billion into the American economy to aid businesses and individuals affected by the current crisis. On Monday, Prime Minister Netanyahu declared a government aid plan worth NIS 5 billion ($1.42 billion).
Relatively speaking, this aid package is bigger than the one proposed by Trump in the US – where the economy is 43 times larger than in Israel.
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When Trump announced his plan, the stock markets in New York jumped by 9% because it was precisely what investors expected – that the government assumes responsibility for the losses incurred by businesses and their employees; assuring the masses they won't be left with empty pockets.
Investors think in practical terms, not moralistic terms – they want consumers to keep consuming, and for the market to function reasonably.
This plan is also audacious because it is measured and level-headed. The prime minister is under immense pressure from the Health Ministry to order a comprehensive shut-down of the economy. The new restrictions will disrupt manufacturing, public services, commerce and industry, but won't freeze them altogether.
The scope of damage these measures will inflict on the economy is unprecedented even in comparison to the wars we've known.
The suspension of certain taxes as stipulated by the plan – on the local and national government levels – VAT and social security – will create an immediate deficit due to the combination of reduced government revenue and soaring expenditures.
The extension of the crisis beyond the next two weeks will necessitate the establishment of an emergency government, with the authority to manage the national budget flexibly and urgently.
The past few days have taught us a lesson in crisis management, when the very generous aid packages from the US Federal Reserve, consisting of drastically reducing the interest rate, failed to influence the market the way the administration's injection of $50 billion did.
Here, too, investors expect realistic steps from the government as opposed to monetary measures from the Bank of Israel. We are not in the midst of a credit crisis, similar to 2008; this is a different animal.
The government is responsible for safeguarding economic infrastructure – good businesses in the fields of tourism, hotels, restaurants, events and leisure – along with other branches – cannot be allowed to disappear.
