The ministry's report noted that the deficit has continued to grow since the coronavirus crisis took hold in March, rising from 3.1% at the end of February and 4% at the end of March to 4.8% at the end of April.

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The total deficit between January and May 2020 came to NIS 46.2 billion ($13.3 billion) compared with just NIS 1 billion ($288 million) in the corresponding period of 2019.

The coronavirus crisis forced the economy to come to a near standstill. As part of the efforts to stop the spread of the pandemic, the government slowed economic activity to 15%, triggering a spike in unemployment, which soared from 4% in the pre-corona economy to 26% by the end of April.

The Finance Ministry said that in May, the budget deficit came to NIS 9 billion ($2.6 billion) compared with NIS 1 billion in May 2019.

The government then introduced an unprecedented NIS 80 billion ($23 billion)  bailout plan to help the economy recover from the effects of the coronavirus.

The Bank of Israel said Sunday it predicts that the budget deficit for 2020 will amount to NIS 150 billion ($43 billion) or 11.5% of the GDP.

Given that the corona bailout plan was approved without first finding sources for it in the state budget, the Finance Ministry will have to borrow money to finance it.

Domestic capital raising in May totaled NIS 18.2 billion ($5.2 billion) and overseas capital raising in bond issues came to NIS 19.9 billion ($5.7 billion).

Government spending in May came to NIS 40.6 billion ($11.7 billion), of which NIS 37.2 billion ($10.7 billion) was government expenditure: NIS 31.3 billion ($9 billion)  for civilian spending and NIS 5.9 billion ($1.7 billion) for defense spending.

Since the beginning of 2020, government spending has swelled to NIS 172.5 billion ($49.7 billion).

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Two weeks ago, US Secretary of State Mike Pompeo arrived in Israel for an urgent visit. During the few hours he spent in Israel, he met with Prime Minister Benjamin Netanyahu and Prime Minister-designate Benny Gantz. Aside from defense and security issues, Pompeo hinted at American reservations about China's growing involvement in Israel, such as the construction of the Tel Aviv light rail system.

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In an interview to Israel Hayom prior to his arrival, Pompeo criticized the Chinese for their handling of the coronavirus crisis. However, both sides deny that this had anything to do with the bid for the desalination plant.

IDE submitted a bid that priced a cube of desalinated water at 1.45 shekels (40 US cents), which is lower than the current lowest price per cube of desalinated water. That reduced price would save the Israeli economy some NIS 3.3 billion ($940 million) while the plant is active. The Soreq 2 plant, which has the capacity to produce 200 million cubic meters of desalinated water per year, is expected to be the largest facility of its kind in the world and increase Israel's desalination capacity by 35%.

An interministerial committee on water desalination in the Treasury announced the winning bid on Tuesday.

Finance Minister Israel Katz said, "I congratulate the committee and the accountant general on their quick, professional work. The new desalination facility will increase the amount of water available and save a huge amount on water costs."

Energy Minister Yuval Steinitz said he was "proud to hand over the water sector to [Water Resources] Minister Ze'ev Elkin in excellent shape. Two years ago, I got the government to pass a revolutionary plan to handle future droughts, and as part of that I decided to double the desalination target for 2030. The desalination plant project, which starts today, is the result of that plan being implemented." 

Elkin noted that "completing the tender and embarking on the construction of a new desalination plant in Soreq is a historic event for the Israeli economy. Israel is once again proving to be the world's leading technological power in the field of water resources and the new scanner facility will be the largest of its kind in the world."

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Israel's economy, regularly lauded for being one of the most stable in the world, was forced to slow down to about 15% activity as the public and private sectors were shuttered in early March in an effort to stem the spread of COVID-19.

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While Israel has been gradually resuming economic activity over the past two weeks, the coronavirus crisis has triggered unprecedented unemployment of 26% – compared to 4% prior to the outbreak. Currently, over a million Israelis have filed for unemployment benefits.

The funds will help revive businesses and promote new projects to encourage employment.

This financial plan also includes assistance to companies operating in industries that have been crippled by the outbreak and cannot resume their regular activities in the near future due to their unique circumstances.

In particular, a loan guarantee of NIS 4 billion ($1.13 billion) will be put in place for them.

i24NEWS contributed to this report.

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One out of every 10 Israelis lives in Jerusalem, and 560,000 of the city's residents are Arabs.

Still, the city has suffered from negative population growth for years, and thus far 2020 has seen 8,400 residents move away.

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Jerusalem's birth rate is higher than the national average, with the average number of children in Jerusalem families standing at 3.9, compared to 3.09 elsewhere in Israel. The average Jerusalem household contains 3.84 members, compared to the national average of 3.24. Jewish women in Jerusalem give birth to more children than Arab women in the city – 4.41 children on average compared to 3.14.

The capital's housing stock is limited, and housing prices there are some of the most expensive in the country. In 2019, the city saw only 2,452 housing starts, a drop of 16.6% compared to the previous eyar. The average cost of a three-bedroom apartment in the city is 2.15 million shekels ($612,000), compared to the average of 1,830,000 shekels ($521,000) elsewhere.   

Half of Jerusalemites of working age (25-64) do not work, and only 50% of adults in Jerusalem are employed, a much lower number than the national average of 63.5%. However, Jerusalem boasts one of the highest percentages of residents who work locally, rather than commuting: 88.7%.

A total of 79,950 students are enrolled in Jerusalem elementary schools, 53,000 of whom are in haredi frameworks, with another 14,200 in religious Zionist schools, and only 12,700 in secular public schools.

The population of Jerusalem is young, with a third (33.5%) of residents aged 0-14. In Haifa and Tel Aviv, the percentage of city residents age 14 and under stands at 19.9% and 18.5%, respectively.

It also turns out that Jerusalemites love to shop online. Ahead of Jerusalem Day, eBay has released data on the shopping habits of Israelis, and Jerusalem is second only to Tel Aviv in the number of eBay purchases. Residents of Haifa made the third most purchases from eBay.

Since Jerusalem Day 2019, residents of the capital have bought over 950,000 items on the popular ecommerce site. The most popular eBay items for Jerusalemites are earbuds/headphones, watches, clothing, CDs, and computer games.

Jerusalemites also use the platform to sell, and this past year have sold over 3 million items, including 178,000 kippahs, 65% of which were purchased from the US.

This past year, Jerusalem residents have also sold over 47,000 items featuring the Star of David. A total of 2,200 Star of David pendants were sold, mainly to customers in the US, Britain, and Israel. Over two-thirds (68%) of the Israeli flags sold were purchased by Israelis living in the US.

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El Al, Israel's flag carrier, is seeking state-backed loans of $400 million to help it through the coronavirus crisis, as foreigners are barred from entering the country and incoming Israelis must enter quarantine.

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The airline suspended passenger flights until at least the end of May while about 6,000 of its workers are on unpaid leave until June 30.

However the government argues the airline's problems, including a bloated workforce, high salaries and a weak balance sheet, began well before the COVID-19 outbreak.

Cabinet ministers and senior finance ministry officials drafted a plan late into Sunday that would help them feel confident the company would be able to repay a loan.

The next step is to present the proposal to the airline, according to a ministry spokesman.

El Al declined to comment.

One source close to the talks said the government demands included a cash injection into the airline of 100 million shekels ($28.5 million) by its main shareholders, a commitment to reduce its workforce, and also the state receiving a stake in the company.

Workers opposing layoffs held a protest outside the ministry on Sunday.

El Al has presented its own plan that includes an unknown number of layoffs, according to the ministry. Any layoffs would require approval by the airline's union, but this is yet to happen, an El Al spokesman said earlier in the day.

A spokesman for Finance Minister Moshe Kahlon rejected media reports that the minister was considering dissolving El Al, which has twice delayed publishing fourth-quarter financial results.

The airline said last month it was in advanced talks with an Israeli bank to receive a loan that will be partly backed by government guarantees.

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The Israeli economy has been hard hit by a lockdown. Initial restrictions reduced economic activity to 30%, forcing some of the public sector and most of the private sector and to pause operations. Over a million Israelis have been placed on unpaid leave or fired, causing unemployment to skyrocket from 4% in pre-pandemic days to over 26%.

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Last month the Finance Ministry announced it will pour NIS 80 billion ($22 billion) into the economy to help it weather the coronavirus crisis, but the measure earned criticism for excluding most small businesses and the self-employed public. Friday's measure seek to rectify that oversight.

The plan includes a grant of up to NIS 400,000 ($114,000) per business, depending on how crippled its operations have become over the past month, the Finance Ministry says in a statement.

It also includes a second stipend for self-employed Israel, up to 70% of their regular income with a maximum of NIS 10,500 ($3,000).

Applications can be made via the Tax Authority's website from the first week of May. Finance Ministry data shows that over 600,000 self-employed Israelis will be eligible for the special payment.

"This is a significant step supporting the resumption of regular economic activity," the Prime Minister's Office and Finance Ministry said in a joint statement.

The government has been trying to outline a gradual return to economic activity but has been criticized for making decisions that discriminate between various retailers in the private sector.

According to a draft presented on Friday to the government by the Health Ministry, all stores outside of shopping malls will be allowed to open, including eateries for pickup and takeaway, florists, jewelry shops, and money changers.

There will be restrictions on the number of customers in the store and customers will be monitored for any virus symptoms. Employees will be required to wear masks and gloves.

Store owners will be required to submit a statement of compliance with the Health Ministry's conditions with their local authority, and any breach would subject them to a six-month jail sentence.

As of Friday morning, some 193 Israelis have died of coronavirus, and the number of confirmed cases reached 14,882. Of those, 139 patients are in serious condition, while some 5,685 Israelis have recovered from the virus.

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Fitch's report said the agency expects the global repercussions of the COVID-19 to cause Israel's gross domestic product to shrink by 5.6% in Israel in 2020, with a lingering impact through early 2021.

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Assuming a progressive normalization of the health crisis in Israel and globally, the agency projects a 5% growth in GDP in 2021, and around 3% in annual growth in 2022.

Unemployment, which spiked from 4% in pre-corona days to a staggering 26% over lockdown measures that crippled the private sector, is expected to remain close to 10% at the end of 2020, the agency says.

Israel's Accountant General Rony Hizkiyahu welcomed the report, saying that "the affirmation of the 'A+' rating at a time of an unprecedented global crisis indicates the agency's confidence in the Israeli economy and underscores the need to maintain fiscal discipline even as we deal with the consequences of the coronavirus pandemic in Israel."

Fitch says that it expects the Israeli government's fiscal deficit to surge to over 10% of GDP in 2020, and that the government debt/GDP ratio will to rise to around 77% in 2020 from 60% in 2019, well above the forecast median of around 56% for 'A' category sovereigns.

"Israel still operates without a formal budget due to the lack of a coalition government and is constrained by a spending limit of 1/12th of the 2019 budget each month.

"However, despite the lack of a formal government, the Knesset voted a budget extension of NIS 50 billion [$40 million] in order to fund specific lockdown-related measures announced by the caretaker government and an additional NIS 40 billion [$11 million] increase to the budget deficit compared with the 1/12th rule. We expect the deficit to remain large in 2021 at over 4.5% of GDP due to partial revenue recovery," Fitch's report said.

"While Israel has a strong track record of debt reduction, fiscal discipline has loosened in recent years, casting doubt on the authorities' ability and willingness to adequately address the rising trend in government indebtedness once the health crisis subsides," the agency cautioned.

"Other features of public debt are largely favorable," the agency noted. "The share of external debt is low, at 8% of GDP in 2019. Israel benefits from high financing flexibility, having deep and liquid local markets supported by the central bank's NIS 50 billion (3.8% of GDP) bond-buying program, strong access to international capital markets, an active Diaspora bond program, and US government guarantees in the event of market disruption," Fitch concluded.

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As of Tuesday morning, the number of confirmed coronavirus cases in Israel was 9,006. Sixty Israelis have died from COVID-19, the disease caused by the virus, and 683 have recovered from it.

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"A substantial part of the policy has been formulated according to lacking inventory in the [healthcare] system," the panel's interim report read.

For example, "It is difficult to tell whether the [Health Ministry's] objection to mass testing was due to objective regulations or the simple fact that they were lacking a sufficient number of test kits, as well as laboratory readiness."

the committee wondered the same about the use of face masks, saying, "The contradictory statements regarding the use of masks are also consistent with the fact that it wasn't until late March that Israel had enough masks" for public use.

The committee further noted that "substantial decisions were made by a very small forum comprising the prime minister and Health Ministry officials, and eventually National Security Council and Finance Ministry officials, something this committee believes reflects a conceptual failure.

"The National Security Council does not have at its disposal unique organizational tools to handle the coronavirus crisis and the political echelon should not be making 'rapid decision as we go' when addressing a far-reaching and multidimensional crisis such as this one," the committee stated.

The panel, headed by Yesh Atid MK Ofer Shelah, further castigated the government over the fact that "despite knowing that the pandemic would arrive in Israel and despite having several known emergency administrations in place, it failed to put together, prior to the outbreak in Israel, a designated task force, nor has it appointed a point-person to coordinate between all the bodies involved in the effort" to curb the pandemic racing across the Jewish state.

Moreover, "To date, the government has failed to name a 'coronavirus cabinet' comprising the relevant ministers, similar to the Diplomatic-Security Cabinet that acts, in times of routine and emergency both, as a decision-making forum."

The committee recommended forming an independent national crisis management body – separate from a similar unit that exists in the Prime Minister's Office – and placing at its helm "an individual man with experience in managing large public systems, who will head a team of professional in a manner similar to that of the General Staff."

The committee noted that the "IDF's Spokesperson Unit and Home Front Command, as well as civilian communications consultants, must be mobilized as part of this effort."

'Health Ministry not up to the task'

The panel criticized the Health Ministry dealing with the coronavirus pandemic, saying its officials, and primarily Director Moshe Bar Siman-Tov were unable to provide it with answers on critical issues, such as the rate in which the virus was spreading in Israel or the true availability of ventilators.

"The committee was less than impressed with the Health Ministry's level of data collection and analysis, as presented to us."

The report further urged the government to allow the economy – scaled back to under 30% as part of the efforts to curb the spread of the virus – to gradually return to full activity.

The move has created an unprecedented 24% unemployment rate, affecting over a million Israelis.

"Even in the absence of an overall exit strategy, insisting on the current policy could bring Israel to a situation where the number of serious cases and fatalities remains low compared to the rest of the world, but the damage to the economy and to society will be irreparable, leading in the long run even to the loss of life.

"The secondary damage from a total and indiscriminate cessation of [economic] activity that is unrelated to the coronavirus could eventually outweigh even the damage caused by the pandemic itself," the panel warned."

The committee urged the government to prepare for the possibility of a "second wave" of coronavirus next winter.

"It is believed that a second wave of the virus will hit in the coming winter, even though the current crisis has not yet passed. This should be addressed on all levels."

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More and more unemployed continue to register with the Israel National Employment Service (INES), with 35,668 added to the rolls on Tuesday alone, a jump of 49% compared to Monday.

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A total of 843,945 registered for unemployment in March 2020. Nearly 90% (89.7%) are workers who had been assigned to unpaid leave, with another 6.4% who were laid off. These numbers – which have translated into an unemployment rate of 24.1% – are unprecedented in the history of Israel.

INES Director Rami Grauer said Tuesday: "Unfortunately, our predictions came true – we reached a million unemployed in March.

"We are working on creating conditions to enable next month to start with lower unemployment by restoring the economy gradually, insofar as we can in accordance with instructions. We are prepared to provide the public with solutions, with aid possibilities laid out as part of the national emergency plan we put together," Grauer said.

He also noted that the INES had mainly been discussing salaried employees.

"If a quarter of the workforce aren't working, then it's obvious that at least a quarter of the self-employed are in a similar situation, possibly even worse. The unemployment service estimates that there are at least 125,000 self-employed workers in Israel who have already been hurt badly by the crisis," he said.

Grauer added that while he welcomed the government's plans to provide compensation and grants to the unemployed, the main goal was to ensure that the nation's businesses and self-employed could get back on their feet and pay their employees.

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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.

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