The government approved the expansion of the aid plan budget by NIS 14 billion on Sunday. According to the Treasury's calculations, together with the aid provided by leveraging those budgets, the total aid package is NIS 100 billion, but the actual implementation is much lower, of course.
The expansion approved by the government today will allow the NIS 8 billion loan to NIS 14 billion to expand to NIS 8 billion, financing tools for high-tech companies of NIS 2 billion, providing state guarantees for vendor credit worth $ 750 million and more.
The budget expansion framework also approved the decision to grant NIS 6 billion to the employee retrenchment incentive to lower the unemployment rate - a plan that has been stuck for a month without progress and has not yet been agreed on the outline. In addition, the Business Loans Fund was refused by the banks under the Small Business Loans Fund due to the risk created by them following the Corona crisis (such as restaurants or event parks).
The NIS 4 billion fund will provide a 60% comprehensive guarantee (dipole) compared to a 15% total guarantee in the original fund, but the agreement with the banks has not yet been signed. Despite the commitment to run such a fund a few weeks ago, it will only come into effect now that the budget committee has approved the budget guarantee.
Finance Minister Israel Katz said that "this is a vital step in the crisis management process that we are facing for the citizens of the State of Israel and for a rapid reduction of unemployment in the country. I will continue to work for you and lead the economy and the Israeli economy to growth. "
The Presidency of Employers and Businesses (Manufacturers Association, Association of Chambers of Commerce and Israel Farmers Association) said: "We are at the beginning of the second wave of downsizing and layoffs, and unfortunately this is a real danger of adding hundreds of thousands of new unemployed as a result of the decline in business activity, even when some of the new layoffs do not leave." In the first wave. It is critical to properly allocate employee retention mechanisms according to needs in the field and not to decide again on a wasteful and useless mechanism.
"Employers in the economy say - The most effective plan for retaining employees is a major compensation plan that includes compensation for decreasing turnover alongside a smart mechanism for retaining employed persons affected by the Corona crisis. In addition, the German model should be adopted which will allow part-time employment with part-time workers' wages. Any other plan would be a wasteful waste of tax money and increase unemployment in the coming months. "
Governor of the Bank of Israel Prof. Amir Yaron attended a government meeting on Wednesday to approve the expansion of the NIS 10 billion aid package for the 2021 budget, saying that "the 2021 budget will come up for discussion in the next two months, during a period of deep economic downturn, and uncertainty It is important that by the time we are convinced that we have returned to growth and activity levels at a proper level, we will refrain from using restrictive fiscal tools that could hamper the economy's recovery. "
He said, "However, it is important to understand that we are at a high deficit, so when growth is based we must drive a process of reducing the structural deficit and maintaining a responsible fiscal policy, enabling a rapid and constant reduction of the debt-to-GDP ratio. The timing for policy change depends on developments In the coming months, it is possible that the process of updating the 2021 budget at the time of approval of the 2022 budget scheduled for the beginning of 2021 may be a suitable point for starting such a process. "
The Governor referred to the NIS 6 billion Employee Employment incentive announced a month ago, but has since remained stuck, saying "today's budget addition includes a number of important components, in particular: a grant for the return to employment of workers who were issued to the IDF or dismissed during the crisis, Establishing a fund that will provide credit with a significant state guarantee for the industries that have been hit particularly hard since the beginning of the crisis, and expanding other credit funds in the state guarantee. The cost of these components - which amounts to over NIS 10 billion - is a significant part of the total package, and it is important that they be announced and implemented quickly. "
Running the business and accelerating moves to reduce unemployment are an important part of the quarantine exit strategy, and the sooner workers return to work, the lower the risk that the Corona's injury in the economy will continue. While in the previous three weeks, no outline has been approved due to delays in the professional ranks, new Finance Minister Israel Katz has now demanded to completely change the model, according to a number of factors involved, and make drastic changes so that the grants are given from the first employee and not just above any transaction rate.
According to Yaron, "There are a number of models and it is clear that none of them are without shortcomings, certainly in the shadow of the high uncertainty in the economy. "The details of the plan must be announced immediately, and activated as soon as the design is incomplete.