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The economy and closure: differences in attitudes between the Treasury and the Bank of Israel
Last night, the finance minister announced that he opposes the closure.
The Bank of Israel also believes that everything must be done to avoid another closure, but contrary to the position of the Finance Ministry, a senior official at the Bank of Israel says:
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Bank of Israel Governor
Director General of the Ministry of Finance
Ministry of Finance
Avigdor Lieberman
Ram Blinkov
Sonia Gorodisky
Tuesday, 10 August 2021, 12:55 Updated: 13:16
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Finance Minister Avigdor Lieberman and senior officials of his ministry have announced that they oppose the closure as a preventive measure against the contagion in Corona.
After such talk was heard in the treasury environment, the minister also enlisted in the campaign and in a public outcry likened the corona to the flu that one has to get used to living alongside and avoid locksmiths.
But this position of the Treasury also flooded an internal controversy at the top of the State of Israel's economy.
Although the Bank of Israel also joins the calls of senior finance officials that everything must be done to avoid a fourth closure, the governor's entourage is convinced that: "Given the situation that there will be no choice, the closure on holidays will produce the lightest economic blow."
This is what is said in the governor's environment.
What is meant by "extremely light economic blow"?
Well, according to the Governor of the Bank of Israel, the loss of GDP as a result of the closure in September will amount to about 0.5% of GDP, which is about NIS 7 billion, half of the expected cost if the closure is imposed in a normal month, without holidays.
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A store in Tel Aviv in the previous closure, October 2020. The closure also began last year on New Year's Eve, but the difference is that then most of the holidays coincided with weekends.
The situation this year creates an opportunity for a "half-price closure" (Photo: Reuven Castro)
"It is important to create public certainty"
The senior official at the central bank added: "A closure on holidays is not the same as a closure in October. The shortage of school days and working days is critical in terms of the impact on the economic price of the closure, so a price will therefore be more negligible around the holidays."
The governor's entourage also clarified:
"Our approach is that if they have no choice but to close, it is important to create certainty among the public - what answer will be given to people who will drop out of the employment circle."
This approach is different approach Treasury officials only yesterday when returning this talk of closure and relief programs (unpaid leave, grants to businesses) are premature and destructive businesses and the public.
CEO Ram Belinkov Finance Ministry said in a conversation with reporters: "It's so early And it's so absurd to think about quarantine. We're not there.As long as the government decides to take these measures, we will know how to answer all the situations and they are analyzed by us to the end.
The talk of closure hurts the public, hurts business.
We doubt the medical effectiveness of quarantine, there is a consensus on the economic damage.
"Today there are millions of vaccinated people, the probability of public discipline is much lower and that greatly reduces the effectiveness of the closure."
Governor of the Bank of Israel, Prof. Amir Yaron.
Sources in his cause estimate that a closure on holidays will cost "only" about NIS 7 billion, a significantly lower amount than imposing it on a full month of work (Photo: Reuters)
Return to Khalat: In the Treasury outright rejection
Contrary to the position of the Ministry of Finance, the Bank of Israel says that the Knesset model is the only tool currently on the table that can be used quickly if a closure is imposed in the near future. But "tight tests" have to be done this time.
The intention is to provide only unpaid leave for unemployed ejected from the employment market because of the closure, and those who have not been working for extended period of time anyway.
In this context Recall Recall that just last week the Finance Ministry Director stated that the model of the leave will not be repeated as the wording was In previous waves: "In the way it was done, which justifies not returning to work, we will not repeat it. How do we get back if at all, we'm discussing it.
But in this way that someone has stated at all that we will not be seriously considered in advance but in retrospect, this form will not return.
"A lot of very good things came out, but also bad things - people refused to return to the labor market, businesses were closed as a result of the labor issue, work ethic was harmed."
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