Bank of Israel: The government's move to a stricter closure will cost NIS 3.5-3 billion a week

The Bank of Israel estimates that the government's decisions to move to a stricter closure, which will reduce attendance at workplaces and completely close jobs that receive an audience and the education system, will entail a cost of NIS 3.5-3 billion a week for the economy. This is in contrast to the Bank of Israel's estimate of the cost of the least tightened closure, which began at the end of December, which was NIS 2.5 billion a week.
The new decisions join, of course, the existing restrictions on leaving the house up to a distance of 1 km, cultural activities, banquet halls, etc.
At the same time, the chief economist at the Ministry of Finance also estimated today that the weekly economic cost of the closure format decided on at the cabinet meeting yesterday will be about NIS 3.5-4 billion per week. When there, great weight is given to the final wording of the regulations that will be approved and how they will be implemented.
The Bank of Israel estimates that the average activity rate in April, when the first closure took place, was 80%, which resulted in a cost of about NIS 5.4 billion a week. The second closure, which began at the end of September, led to a smaller reduction in activity, although the provisions were stricter than in the first closure, so that the volume of activity in the economy was 88%.
The Bank of Israel believes that the reason for this was the businesses' preparation for remote work and the partial observance of the guidelines by the public. As a result, the weekly cost was NIS 3.2 billion.
The damage from the current closure may be deeper than that caused in the second closure in September and October, mainly because most of the second closure was imposed during the Tishrei holiday period, when some of the activity is shut down anyway. On the other hand, the harm this time may be milder, as some businesses have improved their readiness for activity under closure. The Bank of Israel emphasizes that the estimated cost is only a direct cost, and does not include indirect damage that may be caused in the future, for example due to an increase in the unemployment rate or bankruptcies.
Estimates of the damage to the economy are controversial between the Bank of Israel and the Ministry of Finance. The Bank of Israel estimates that the cost of the current restrictions is NIS 2.5 billion a week, while the Treasury estimates that the damage is already NIS 3 billion a week. Acting Director General of the Ministry of Finance and Director of the Tax Authority, Eran Yaakov, said at a government meeting that the tightening of the closure would lead to an additional damage of NIS 4-3 billion in two weeks and opposed the move.