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July 6, 2015 / 19 Tammuz, 5775
At a Glance

Posts Tagged ‘economy’

Lapid Won’t Let Defense Demands Turn Into ‘Turkish Bazaar’

Tuesday, September 16th, 2014

Finance Minister Yair Lapid vows to quit the government rather than raise taxes, an issue being debated as the government considers the budget for 2015, and says he won’t let the defense budget become a “Turkish bazaar.”

Lapid, who chairs the Yesh Atid party, is not willing to quit the coalition without a fight over the issue, however – and certainly not willing to crash the government over it.

“Elections are not a good thing for the state of Israel,” Lapid said in an interview with the Hebrew-language Ynet site. “I’m not afraid of elections, but they’re not necessary.. “

Nevertheless, he said, “I will quit the government rather than raise taxes. I ran with this for office and I said I won’t let it get to a situation in which every time there’s a problem, the government milks the public for all it has.”

At the end of the day, however, it doesn’t seem as though there will be a real problem in getting a budget passed. The kind of wrangling going on over the issue is the same kind of debate that is seen every time a budget comes up for discussion, Lapid said.

“It does not seem to me to be very different to the kind of conduct we’ve seen before every budget passing. I’ve been through a hard budget already with all of the pressures it involved. There are always pressures being put on the finance minister.”

Pressure is one thing, Lapid said, and he understands the defense ministry needs more money to be able to deal with the expenses of this summer’s counter terror Operation Protective Edge. There must also be a budget to pay for defense against other enemies, and to deal with the issue of possible return shelling and rocket attacks, and terrorists rebuilding tunnels in Gaza.

Yes, he acknowledged, “We need money for that. But I won’t let it turn into a Turkish bazaar. I want to give you all the money we have, but I can’t give you money we don’t.”

Bank of Israel Introduces New NIS 50 Note

Wednesday, September 10th, 2014

The Bank of Israel has introduced a new fifty shekel note bearing the likeness of Shaul Tchernikovsky, a Russian-born Hebrew poet identified with nature poetry.

“It is unique in both its design and its security technology, which is among the most advanced in the world,” noted BOI Governor Dr. Karnit Flug.

The note was introduced at a joint news conference with Prime Minister Binyamin Netanyahu Wednesday morning.

“In order for this note to retain its value, we must guard both security and the economy,” Netanyahu said. “I very much appreciate your seriousness and professionalism and that of the Bank of Israel staff, in maintaining the stability of the Israeli economy. This is one of our two missions.

“We must increase the security budget due to Operation Protective Edge, and guard the economy, and these items meet in the deficit which we can control and which not topple us,” Netanyahu went on. “This will be our policy and thus we will act, together.”

Shekel-Dollar Rate Soars to 3.60 for First Time in a Year

Friday, September 5th, 2014

The shekel-dollar rate continued its sudden rise Friday and was quoted at more than 3.605 shekels to the dollar for the first time a year.

The rate had dropped to as low as 3.40 this summer. The Jewish Press noted last year that the rate was likely to go down to at least 3.40 if not 3.30 because of the stable economy and Israel’s new era of an energy exporter of natural gas.

A slowdown in growth, the war in Gaza and the increasingly unstable Middle East set a floor of 3.40 for the rate. One sure sign that the bottom had been reached was almost universal agreement among analysts that the rate hit a resistance area of 3.57 earlier this week and that the rate would turn down.

The Theory of Contrary Opinion again was borne out with the non-stop rise, which so far has capped at 3.60.

Analysts at Bank Igud said that support for a weakening shekel is coming from “the slowdown growth, negative economic influences from the Protective Edge counter terror campaign, and from the need to establish social-economic priorities.”

Bank Leumi also cast doubts that the shekel will weaken.

As everyone jumps into the same camp again, the rise in the shekel-dollar rate may have finished its rise for the time being.

Israel’s Economy: Stunned But Still Strong

Monday, September 1st, 2014

Despite the numerous setbacks suffered in Operation Protective Edge, Israel’s economy remains resilient. Amid news of massive budget cuts needed to pay for the latest war and losses to the tourism and retail industries, statistics from many sources project a rapid economic recovery and continued growth of one of the world’s most vibrant small economies.

The war in Gaza has taken a significant economic toll on Israel, felt most sharply by the tourism sector, which comprises some 7 percent of Israel’s economic activity. Israel’s Ministry of Tourism reported that tourism for July dropped by 26 percent from the same period last year, representing a loss of at least $566 million.

Hardest-hit from the ongoing war are the businesses in the south of the country, where the majority of the Hamas rockets hit. Stores and restaurants have suffered from a drop in sales, while manufacturing facilities close to the Gaza border have been impacted by slowdowns in manufacturing due to incessant rocket alerts.

Israel’s Manufacturers Association estimated the total economic impact on Israeli manufacturers for the first round of the conflict at about 1.2 billion shekels.

A number of economic studies indicate, however, that these setbacks are likely to be temporary, with the overall forecast for the country remaining positive. In a study published in early August, Dr. Adam Reuter, former senior officer at the Bank of Israel and the head of several investment firms, found that over the last 30 years Israel’s economy has enjoyed vigorous and sustained growth that continues to this day.

Between 1984 and 2014, Israel’s gross domestic product (GDP) increased tenfold from ‎‎$30 billion to $300 billion, while per-capita GDP rose from $7,000 to ‎‎$38,000. Negative indicators fell likewise: The public debt-to-GDP ratio shrank from 280 percent to 66 percent, the external ‎public debt-to-GDP ratio fell from 55 percent to 10 percent, and the budget deficit-to-‎GDP ratio declined from 17 percent to 3 percent.

Over the same time period the defense budget as a percentage of the GDP went down from ‎‎20 percent to 6 percent, and annual inflation plummeted from 450 percent to 1 percent.

Further numbers from this study reveal Israel’s impressive performance in the global market: Foreign ‎exchange reserves rose from $3 billion to $89 billion, and annual exports climbed from $10 billion to ‎‎$90 billion, of which hi-tech exports accounted for $28 billion in the last year compared to just $1 billion 30 years ago.

The recent war in Gaza is not expected to inflict any lasting damage on economic performance, noted Yoram Ettinger, a former ambassador for Israel and a longtime consultant to the Israeli government. In all three previous wars – the 2006 Lebanon War and the previous two operations in Gaza in 2009 and 2012 – the reaction of the economy has been one of brief downturn followed by rapid and complete recovery, “a ‘V’ and not ‎a ‘U’ shaped graph,” Ettinger wrote in a letter published last week.

The consultant noted that according to the Bank of Israel, “the 2006 war against ‎Hezbollah triggered an immediate drop of GDP from more than 6 percent to a ‎negative growth of 1.5 percent, followed by a swift recovery to almost 10 percent ‎growth in the following quarter.”

Operation Protective Edge is expected to lower Israel’s 2014 GDP by 0.5%, but will likely have “insignificant influence on foreign investors, most of whom seek Israeli high-tech companies, which are minimally vulnerable to rocket and missile fire,” he added. With the Israeli military’s emphasis on minimizing civilian casualties and its focus on defensive rather than offensive technologies, the economy may even receive an incidental benefit from the war: “The ‎expanded global interest in Israeli-developed and manufactured, battle-‎tested defense systems (e.g., Iron Dome, Trophy, etc.) – which ‎demonstrated their unique capabilities during the Gaza war – is expected to ‎bolster a quick recovery and the continued growth of Israel’s economy,” Ettinger explained.

Summer of War: The Cost of the Conflict on Israel

Monday, August 25th, 2014

The nearly two-month-long conflict with Hamas that has taken an economic toll on Israel, In addition to the military expenditures from Operation Protective Edge, physical damage to commercial facilities and the financial impact on industries such as retail and tourism have dragged the country into an economic slump, while the psychological cost on the children growing up in the south will take years to assess.

Nearly 3,000 claims for damage have been submitted to the Israel Tax Authority, which has so far paid some $20 million for direct damages and another $21 million for missed work days and other indirect damage. According to existing laws, workers in businesses located within 40 kilometers from the Gaza border get paid for the days they are absent from work, and their employers are eligible for full compensation from the government for these wages.

Israel’s Ministry of Tourism reports that tourism for July dropped by 26 percent from the same period last year. The sector, comprising about 7 percent of the Israeli economy, has lost at least $566 million, according to the figures.

The hardest-hit from the ongoing war are the businesses in the south of the country, which has sustained the bulk of the rocket fire from Hamas. Stores and restaurants have suffered from a drop in sales, while manufacturing facilities close to the Gaza border have been impacted by slowdowns in manufacturing due to incessant rocket alerts.

Israel’s Manufacturers Association estimated the total economic impact on Israeli manufacturers for the first round of the conflict at about 1.2 billion shekels, with factories in the south accounting for 40 percent of this figure, and facilities in Haifa and the center of the country incurring half the losses.

The agricultural sector has also experienced significant physical damage from the falling projectiles. Since the Iron Dome system is only activated when there is a projectile headed for a built-up area, thousands of rockets and mortars have landed in open fields, many of them belonging to farms. In addition to crop damage, there have been a number of incidents of injury and death of cattle, chickens and other livestock as a result of rocket impacts.

In an effort to assist businesses hurt by the conflict, Tourism Minister Uzi Landau proposed a tax exemption to Gaza-adjacent communities in the south. The move would be part of a comprehensive aid package consisting of tax breaks as well as reparations.

The latest war with Hamas came at a time when the Israeli economy was already in a slowdown, with a strong shekel decreasing exports and growth for the second quarter of 2014 falling to 1.7 percent from 2.8 percent in the first quarter. In response, the Bank of Israel decided on July 28 to cut its benchmark interest rate to a five-year low of 0.5 percent.

“We assess that economic activity is experiencing a sort of contraction, that began before the start of the Gaza operation,” the bank said Aug. 18. “This contraction will worsen in the current quarter, although some degree of rebound can be expected as soon as the hostilities cease.”

Israel Gears Up for Post-War Economic Challenge

Monday, August 11th, 2014

Israel will face a challenge getting the economy back on track after the war is over, but the ‘startup nation’ is nothing if not resourceful.

At the start of the month, MK Ofer Shelah – a member of the Knesset Finance Committee, told Reuters that Operation Protective Edge was “definitely going to cost more than NIS 10 billion ($2.9 billion).”

The loss of summer tourism income was projected to be more than NIS 2.2 billion, including some NIS 500 million from empty rooms at hotels. Many tourists canceled trips within the country due to missile attacks; foreign airlines canceled flights for several days due to the FAA flight ban that followed a single rocket aimed at a town near the airport.

Likewise, the Israel Manufacturers’ Association estimated drop in production at some NIS 820 million. The figure results from workers staying home due to missile attacks, due to others being called up for reservist duty, leading to a loss in production, and from damage to factories in missile attacks.

However, Michael Sarel, former chief economist at the Finance Ministry, was optimistic. He pointed out that “if it will be completely quiet” as it was after the last three operations were over, “the economy has proved it is quite resilient to these kinds of shocks and the impact will be only one quarter.”

Emergency Measures to Assist Residents of South

Thursday, July 24th, 2014

The Agency for Small and Mid-Sized Enterprises at the Ministry of the Economy has announced an emergency plan to assist businesses in war-battered southern communities.

The plan includes special assistance programs for small and mid-sized enterprises in the south, assistance in obtaining money from the property compensation fund, business advice and advice for obtaining financing from funds.  

The special benefits will be available to small businesses up to 40 km from the Gaza border, who will receive fee exemption and expedited treatment. The program will be administered by the Maof network . Services will include 
  *   Assistance in obtaining compensation from property tax – a new service to help enterprises navigate the bureaucracy at the Tax Authority, including filling out forms.
  *   Expert advice and business and marketing consultancy – eligibility for up to 20 extra hours of business consultancy.
  *   Special emergency guidance for businesspeople – led by experts and fully financed by the Agency on subjects related to the emergency situation (financing, labor law, cash flow, etc.)
  *   Advice for obtaining financing from funds – funds which have activated programs for this zone. The advice will help businesspeople fill out the necessary forms of a fund. The service is free.

In addition, the ministries of finance and the economy announced a special supplement of NIS 100 million to a loan-guarantee program for small- and mid-sized businesses in the Gaza Belt region. The program ensures government-backing for business loans in the area. Lastly, representatives of the agencies coordinating the government-back loans will be available to meet businesspeople at Maof offices in Ashdod, Ashkelon, Beersheva, and Sderot. The Agency states that businesspeople from the confrontation zone seeking assistance will be exempt from the NIS 250 registration fee and that applications will be handled expeditiously, taking nine days instead of the month required in normal times.

Minister of the Economy Naftali Bennett commented, “We are also supporting the soldiers on the economic front. Economic soundness and ensuring financial security of businesses in the south is a critical part of the strength of residents of the south. We are taking steps to support businesspeople and ensure their stability immediately, and we will continue to do so after Operation Protective Edge is over.”

For more information, residents of the eligible areas can telephone 1-700-558-040, or visit the Agency for Small and Mid-Sized Enterprise website at www.sba.economy.gov.il.

Printed from: http://www.jewishpress.com/news/breaking-news/emergency-measures-to-assist-residents-of-south/2014/07/24/

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