An analysis by economist Yaniv Bar of Leumi Capital Markets shows a relatively low pace of implementation of the promises to rehabilitate the economy • Almost two-thirds of the total budget expenditure for 2020 has not yet been implemented
Queue to the Employment Bureau
Photo:
Joshua Joseph
The aid was promised, but comes only partially - according to an analysis by economist Yaniv Bar from Leumi Capital Markets. By the end of July, about 42% of the total economic plan had been implemented, a relatively low pace of implementation. The total scope of the government's economic plan to deal with the consequences of the corona crisis is about NIS 135 billion, as of July, of which about NIS 82 billion is from the state budget.
An examination of the actual implementation against the quota set by law in a monthly distribution shows that the implementation rate of the budget part of the government assistance program amounted to NIS 22.5 billion by the end of last month, compared with a permitted quota of NIS 35 billion.
Prime Minister Netanyahu presents the economic aid program // Photo: GPO
Nearly two-thirds of the total budget expenditure for 2020 has not yet been implemented, and cash execution stood at only 27.5%. In addition, the total cumulative payment to workers in the IDF by the end of July, which is made through the National Insurance Institute, was about NIS 7 billion out of a total allocation of NIS 12 billion, leaving about NIS 5 billion to support workers in the IDF in the coming months.
Increase in credit cards
Bar also refers to public spending on credit cards, noting that "an examination of the rapid indicators of activity published by the Bank of Israel indicates an increase in credit card purchases in the first quarter of August, and now this volume is only slightly lower than at the beginning of 2020. For the most part, since a large part of the households go on vacation in August, which is reflected in an increase in travel and entertainment. "
The economic corona: Half a million remain unemployed
Bank of Israel: Aid to the economy - low; Finance: Not a serious report
More than 50,000 people do not receive the corona grant
Looking ahead, Leumi estimates that under the current plans, the Israeli government's budget deficit is expected to reach 12% of GDP in 2020. "A relatively high deficit is also expected next year, with the debt-to-GDP ratio rising to 80% to 85% in 2021. We estimate that the domestic product will shrink by 7.9% in the sum of 2020, with a significant contraction of 8.2% in private consumption. "
Growth in 2021
As for 2021 - "In a scenario that assumes a return to activity later this year, our estimate is for 5.5% growth, but in a scenario that assumes restrictions on activity will continue beyond the current year, we expect a more moderate growth of 3.2%."