Finance Minister Moshe Kahlon warned Friday that the Health Ministry's demand to impose a full lockdown on public life and economic activity would spell "economic disaster" for Israel.
Officials at the Health and Finance ministries have been locking horns on the issue since the coronavirus outbreak began. The economy is currently operating at 30% capacity as part of the government's efforts to stem the spread of the virus.
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The Health Ministry said Saturday that 12 people have so far died of COVID-19, the disease caused by the virus. There are currently 3,619 confirmed corona cases in Israel, with 54 patients in serious condition.
Friday's meeting focused on the Health Ministry's demand to cut economic activity to 10%, which the Finance Ministry believes would cripple Israel and would make restarting the economy once the pandemic subsides extremely difficult.
"I probably won't be here in a couple of weeks, so I come from a clean position," said Kahlon, who announced his retirement from politics ahead of the March 2 elections.
"We all want to save lives and save the economy, but I'm telling you – you're going about it the wrong way. This [tougher restrictions] will result in an economic disaster."
Kahlon and Bank of Israel Governor Dr. Amir Yaron have greenlighted a NIS 80 billion ($22.5 billion) bailout package to help the economy through the pandemic.
Unemployment in Israel skyrocketed to an unprecedented 21% over the past two weeks over the fact that the lockdown imposed on the economy has forced hundreds of companies to place employees on leave or fire them. Thousand of small- and medium businesses have had to shutter completely.
The plan has not been hammered out completely and still needs to devise how the money will be divided and where it would go exactly, as well as whether the high tech industry – a vital growth engine – will be eligible for any incentives.
According to available details, the bailout earmarks NIS 5 billion ($1.4 billion) to help small businesses and NIS 6 billion ($1.7 billion) for large businesses.
According to Channel 13 News, the plan also includes a fund for leveraged loans. This aims to help businesses that have already taken on considerable debt manage the credit crunch.
The state will also appropriate an additional NIS 10 billion ($2.8 billion) for the payment of unemployment benefits.
Finance Ministry Director Shai Babad has warned that the deficit in 2020 will jump to more than NIS 100 billion ($27.7 billion), compared with NIS 55 billion ($15.2 billion) in 2019.
Babad warned that the economic cost of a five-week shutdown would amount to some NIS 130 billion ($36.4 billion), and that a 12-week economic lockdown would cost NIS 280 billion ($78.5 billion).
He also warned that in a five-week closure, the economy would lose 3% to 5% of the gross domestic product, while 12 weeks will take 9% away from the GDP.
