Senior figures in the Ministry of Finance, the Bank of Israel and the Israel Securities Authority want to stimulate new activities in the economy by encouraging non-bank credit. The non-bank credit sector is frozen due to losses and fears. Opponents to the plan claim that the non-bank credit sector has already received incentives in the existing government stimulus package.
Supporters of the plan are urging the government to provide immediate guarantees to non-bank credit companies, so that they will provide immediate credit to the business sector.
This support would be in addition to the NIS 6 billion in guarantees that the government will provide for raising capital from the banking system that has already been approved in the stimulus package. Estimates are that the amount needed for guarantees to the non-bank credit sector, which in recent years has provided half of the credit in the Israeli economy, would be an additional NIS 6 billion.
However, opponents of such a plan claim that the non-bank sector was taken into consideration within the framework of the NIS 5 billion, which was allocated in the stimulus plan for setting up joint funds for institutional bodies and the government, which would handle non-bank credit.
But some senior officials insist that even if NIS 2-3 billion of this allocation is used to leverage non-bank credit, such a sum will not be enough.
Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2008
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