The State of Israel has apparently completed the economic quarantine phase and is gradually entering its gradual thaw. The goal - to restore economic activity to almost full levels in the process of about two months, with industries such as aviation, tourism, restaurants, theaters and the like, will continue to suffer from economic decline for many more months.

The key question is whether the state's aid to workers, self-employed and companies is reasonable, given the objective economic constraints and compared to other countries, and whether there is a real macroeconomic option to significantly increase the overall amount of aid to industries that will continue to decline for a long time.

The economic answer to the second question is, unfortunately, negative. The state has reached its economic and budgetary options for direct economic aid to the economy. If you do, the bankruptcy danger will shift from the business sector to the country itself, as happened in Greece, Italy, Spain, Ireland and Iceland after the 2008 crisis. These countries failed to finance their budget deficits, entered a prolonged crisis of growth and unemployment, and even had to seek emergency assistance. From other countries or international institutions.

The State of Israel's assistance to the business sector and employees is reflected in the granting of unemployment benefits to workers who leave the US and similarly self-employed workers, even though they did not pay social security to the unemployment sector. At the same time, three funds were established, one for self-employed persons, which does not provide sufficient guarantees (too low a guarantee rate The state) and the other two are in the process of establishing and include credit to companies and relatively large independents. The Bank of Israel is planning and implementing a NIS 50 billion government bond to protect this bond, and is implementing a policy of monetary expansion.

International comparison shows that Israel is roughly similar in business aid to most countries of the world, excluding the US and Germany. Israel's total and updated aid is estimated at NIS 90 billion today, about 6.4 percent of GDP, and is roughly similar to that in most developed countries. In Switzerland, it is about 6 percent and in Sweden about 5.4 percent, the differences between countries are mainly in aid, credit or grants, wage participation or unemployment benefits. 

Budgetary government assistance in Israel is reasonable, but not enough. Hence the need to understand the protest of the self-employed and societies, who have to deal with economic difficulties that arise mainly from the uncertainty about the future. Since there is no real option to increase government subsidy, only the removal of the economic closure can significantly change the economic picture.

Israel's real dilemma is that we are already in serious fear of a fiscal crisis. Expanding aid will create an almost unsolvable crisis. In accordance with international "rules of the game", governments must act like business companies. It is absolutely forbidden to print money and / or get a loan from the central bank (Law in Israel 1985). Anyway, any gap between income and deficit (deficit) must be funded by issuance in the domestic and global bond markets. A large surplus in deficit and issuance quickly raises (sometimes in a couple of weeks) interest rates to an unbearable level, requiring the state to immediately make huge spending cuts or Get foreign aid.

We experienced a crisis of this kind in 2003 (the second intifada) when the deficit rose to 6 percent of GDP and interest rates on government bonds rose to 13 percent shekel and to 6 percent tight. Only US Treasury and supplementary policy guarantees back then-Netanyahu The economy stabilized and prevented the collapse of financial and real systems. 

Today, in 2020, Israel's financial situation is better (national debt of 60 percent of GDP compared to 100 percent in 2003). The deficit for the past year rose to 4 percent. The Treasury assumes that under these conditions the short-term budget deficit could rise to 7.5-7 percent of GDP, with no real risk of a financial crisis, but examining the current data shows that due to the fall in tax revenues and increasing spending - the deficit will reach about 10 percent of GDP. This means that the state will soon have to cut public sector wages, eliminate tax exemptions, reduce coalition spending and possibly even increase VAT. It is not possible at all to increase government spending with the aid of economic sectors, it is necessary to gradually thaw economic closure.

Yoram Gabay is the former State Revenue Commissioner and author of "The Affluent Affluent and Peaceless Company"