Governor: NIS 15 billion needed as a safety net to cope with the situation • Prof. Yaron estimated that injecting money into the market would not cause hyperinflation • "Time to rise above political considerations"

• Bank of Israel // Photo: Oren Ben Hakon

The Prime Minister's Office announced last night that only the Treasury will present the economic emergency plan demanded by the Prime Minister earlier this week. As of last night, the Treasury was not ready with the emergency plan. At the same time, the Ministry of Finance warns that the economic price of a full closure and the restoration of the economy will rise to NIS 140 billion, a loss of 10 percent of GDP.

The Governor of the Bank of Israel, Prof. Amir Yaron, said in a telephone briefing yesterday: "Without health there is no economy, but without economy there will be no health."

The Governor also added that the depth of the damage to the Israeli economy will be determined by the nature of economic policy. "I am in daily contact with the Prime Minister. The ball is now moving to the Knesset, and I urge the Knesset to rise above all political considerations. "

"This is the time to support businesses. To allow businesses to emerge from the crisis when the restrictions are removed, we must help those who are affected and those who are laid off."

The virtual press conference also included Deputy Governor of the Bank of Israel Andrew Abir, Supervisor of Banks Dr. Hedva Bar and CEO of such bank Hezi.

The Governor does not lower the interest rate in Israel, unlike in the world, but according to him, "If there is aggravation and worsening in the financial markets, the Bank of Israel will have additional monetary tools that it will not hesitate to operate."

According to Prof. Yaron, the Bank of Israel did not have to sell dollars, but thanks to foreign currency reserves, which amount to $ 131 billion, the bank can make $ 15 billion of swap transactions. The governor's words jumped the NIS against the dollar by 1.5% to NIS 3.6, and by 2% against the euro to NIS 3.89.

Prof. Yaron and Andrew Abir noted that the monetary expansion and the safety net for government bonds that the Bank of Israel made when it purchased NIS 50 billion in government bonds is three times the purchase in the 2009 financial crisis.

The Governor of the Bank of Israel emphasized the need for a budget security net of NIS 15 billion to deal with the entire struggle in the crisis of the Corona epidemic. According to the bank, the current crisis will cost the state coffers NIS 90 billion in the short scenario and 130 billion or more if it continues in May. The Governor of the Bank estimated that injecting money into the market would not cause hyperinflation. So far, the Treasury has allocated NIS 29 billion to fight the Corona crisis.

"This is an external crisis to the economy, a global crisis, so I am in continuous contact with all the governors of the world's central banks," the Governor added. He said, "Proper economic management will shorten and reduce the depth and intensity of the damage to the Israeli economy."

The Bank of Israel estimates that the budget deficit will climb to 7%, but the Governor is reassured that this is a temporary event that could return to normal by next year. Governor Yaron and the Supervisor of Banks Hedva Bar emphasized that the banking system is robust and stable. The Bank of Israel's position is currently rejecting intervention in the stock market or corporate bonds. According to Andrew Abir, regarding corporate bonds, the Bank of Israel is monitoring the market and no intervention is needed.

Meanwhile, the Finance Committee yesterday held its first meeting since 1988 without the mythological chairman, MK Moshe Gaffney. The Provisional Finance Committee convened for the first time, chaired by incoming interim chairman MK Oded Forer (Israel Beitano), to discuss the situation.

State guarantee loan.

Accountant General Roni Hezekiah appeared before the committee on the provision of a state guarantee to the dedicated business aid fund due to the spread of the Corona virus. He said the Treasury is putting NIS 4 billion into bank loans for businesses through a new fund, through the approval of a NIS 480 million bank guarantee. "We believe that the more we know about the banks' risk, the more the credit tap will open," Hezekiah said. At present, despite the announcements, the fund will not grow to NIS 8 billion.