Corona crisis attacks Israeli economy • Ministry of Finance updates steps to ease workers and employers in dealing with new situation

• The deficit will leap as a result of the Corona crisis // Illustration: Gettyimages

In a telephone press briefing, the Treasury Department updated the steps taken so far to assist employees and employers in coping with the new situation imposed on the market. Employers will be able to take out workers to the USSR without being fired, and these will be eligible for improved unemployment benefits and under conditions that are less favorable.

The self-employed and unemployed will be entitled to a one-time grant of NIS 6,000. The grant will be paid directly to the taxpayer accounts. These are 200,000 to 250,000 self-employed and hundreds of thousands of employees, with the grant being graded and differential. In addition to deferring VAT, property taxes, and compulsory payments to self-employed, the tax authority will prioritize the payment of income tax returns and VAT refunds.

Water corporations and the electricity company will be required to postpone payments. Negative income tax payments (work grants) will be promoted for 2019 which should have been received during the next quarters.

Although the 2020 budget is a continuing budget, Accountant General Roni Hezekiah has already approved the allocation of billions of shekels in favor of the Ministry of Health, and every request from the ministry is answered promptly. It is estimated that the Ministry of Health budget of NIS 40 billion will be increased by at least 50%.

In addition, billions of shekels will have to be spent in favor of the Interior Ministry and the local authorities as compensation for Corona's expenses to cover the loss of income from the postponement of property taxes.

The working assumption is that the state budget deficit in 2020 will exceed the planned 2.9%, in the more optimistic scenario it will rise to 4.5% -4% of GDP. In a full-blown scenario, the budget deficit will climb to a record 6.5% of GDP, a fact that will of course also negatively affect the debt-to-GDP ratio. The weakening of the shekel against the dollar and its euro will also contribute to an increase in the debt ratio.