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Israel expands coronavirus aid package to $2.8 billion

imageEconomy9 hours ago (Mar 11, 2020 02:21PM ET)

Israel expands coronavirus aid package to $2.8 billion

By Steven Scheer

JERUSALEM (Reuters) – Israeli Prime Minister Benjamin Netanyahu said on Wednesday the government will expand an aid package to help the country deal with the coronavirus outbreak by 6 billion shekels to a total of 10 billion shekels ($2.8 billion).

Of that, 8 billion shekels will be in a fund to provide cheap loans to businesses.

Another 1 billion shekels will boost the health system by increasing medicine stocks and preparing hospitals to receive a larger number of patients. The final billion will be earmarked for needs such as the police force.

Netanyahu told a news conference, alongside the central bank governor and top Finance and Economy Ministry officials, the state would add funds as needed to fight coronavirus.

The government has already pledged to establish a 4 billion-shekel credit line for banks to lend money to businesses facing a cash crisis with government guarantees.

“A business that has been hurt is entitled to ask for a loan from the fund. We lowered the interest rates,” Netanyahu said.

It was not immediately clear where the funds would come from since a 2020 budget has not been passed due to a year-long political stalemate. A version of the 2019 budget is being used by a caretaker government, after no clear winner emerged from the election on March 2, the third vote in less than a year.

Later on Wednesday, Netanyahu announced a ban on gatherings of more than 100 people.

Israel has 82 confirmed coronavirus cases and is taking strict measures to contain the virus’ spread, including requiring anyone arriving from overseas to self-quarantine for 14 days. Many airlines have suspended service to Israel.

Finance Minister Moshe Kahlon said that if the situation did not improve soon, more tools would be announced next week.

Bank of Israel Governor Amir Yaron said the economy and banks remained in good shape but that the central bank “has tools to restore liquidity to markets” if necessary.

Israel’s economy grew 3.5% in 2019 but is expected to take a hit this year due to coronavirus.

The main Tel Aviv share index (TA125) is down 20% this year. The shekel has fallen 4% against the dollar in the past three weeks.

“The Israeli economy has ample room to cushion uncertainty,” Citi strategist Luis Costa said.

Earlier in the day, flag carrier El Al (TA:ELAL) warned of a significant adverse affect on its operations from the government’s quarantine order. Kahlon said the airline sector would receive special state aid.

Israel expands coronavirus aid package to $2.8 billion

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