Israel will spend 80 billion shekels ($22 billion) to help the economy weather the coronavirus crisis and Finance Minister Moshe Kahlon said Monday that he expects a gradual return of business activity after the Passover holiday next month.
The Israeli economy has been hard hit by a government lockdown aimed at curbing the spread of the coronavirus. Increasingly stringent restrictions have largely confined Israelis to their homes, forcing businesses to close and causing unemployment to rocket.
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Initial restrictions reduced economic activity to 30%, forcing some of the public sector most of the private sector and to pause operations. Hundreds of thousands of Israelis have been placed on unpaid leave or fired, causing unemployment to skyrocket to over 23%.
Finance Ministry Director Shai Babad said last week 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).
On Monday, Prime Minister Benjamin Netanyahu declared economic activity will be forced to slow even further, to 15%.
In a televised statement that aired immediately after Netanyahu's announcement, Kahlon said the NIS 80 billion stimulus plan - representing 6% of Israel's GDP – provides massive funding to the healthcare system, struggling small- and medium-businesses, salaried employees and the self-employed.
"The coronavirus has brought about Israel's worst-ever economic crisis," he said. "The number of people seeking unemployment benefits has surged to about 1 million in less than a month, up from a pre-crisis level of 30,000 unemployed.
"Our job is to formulate a significant and broad response as possible that will address the damages the crisis has inflicted and that is what this plan is for.
"This situation will not last forever and I believe that, immediately after Passover, the economy can gradually start resuming its activity in full," he continued.
"I'm aware that [the financial package] won't return the situation to what it was prior to the crisis. But we are speaking about the most substantial plan that the Israeli economy has ever seen. We will not allow the Israeli economy to collapse."
