Governor of the Bank of Israel Prof. Yaron at the Cabinet Meeting: "Israel Gets High Confidence in World Markets"

• The Governor of the Bank, Prof. Yaron

  Photo: 

  Joshua Joseph

The Governor of the Bank of Israel, Prof. Amir Yaron, said yesterday at a government meeting that "it is time to take advantage of the security pads we have in place to mitigate the crisis, and to allow the economy and the public to pass it with minimal damage."

He said, "Behind the numbers and figures are people. Policies should allow the routine of life alongside the virus, and a rapid recovery when we can restore the economy to full operation. To the economy's recovery, in a way that will allow them to return to business and consume more quickly, effectively extending the 'economic bridge' needed for the economy to cope with the crisis. "

Prof. Yaron has reflected on the significance of her decisions so far, concluding that the budget cost of the new program will be NIS 15 billion this year and NIS 27 billion next year. These amounts relate only to budgetary expenditure, and it does not include NIS 50 billion raised so far and NIS 28 billion added under the latest aid program. "It is important to remember," the Governor said, "that this is a potential cost, assuming that the unemployment rate does not fall below 10%. In this case, the deficit could reach 13 percent of GDP this year and 7 percent of GDP in 2021, 76 percent of GDP at the end of 2020 and about 78 percent of GDP at the end of 2021. "

Photo: GPO

The Governor made it clear that the government has the ability to fund the plan and that the world markets place great faith in the Israeli economy and the government's commitment to maintain fiscal discipline. "Of course, when the crisis subsides, it will also be necessary to deal with a gradual reduction of the accumulated debt - and more will accumulate - during the crisis," Prof. Yaron clarified.

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It should be mentioned that after the outbreak of the crisis, the previous government embarked on two global bond issues, which met very high demand for long-term - some for 50 and 100 years - a range that was first issued since the establishment of the state. In these two borrowings, more than NIS 70 billion (foreign exchange) was raised, at particularly convenient interest rates. The Governor spoke about this in explaining Israel's good position in the world's financial markets. The

Governor further clarified the Bank's commitment during this period to assist credit sources and convenient interest rates for businesses and economies.  House, and not just the government: "To this end, we are taking a range of policy measures and working to lower borrowing costs for the government, the business sector and households, and with emphasis on running programs that will help small and small businesses as well." 

In Israel, as in the world, it is clear to the governments and central banks that the main tool is now It's a credit, because the pretense of compensating businesses and individuals for hurting turnovers is becoming less realistic, as you realize it's not a temporary crisis.