The Israeli government's decision yesterday obliging anyone returning to Israel from overseas to isolate themselves for fourteen days, as a way of restricting the spread of the coronavirus, will cost the economy NIS 4.3 billion monthly in lost product, according to Ministry of Finance Chief Economist Shira Greenberg.
Nevertheless, at this stage the Ministry of Finance does not plan to invoke additional measures besides those that will allow the provision of credit to businesses that encounter cash flow difficulties because of the crisis. At this point, there is also no intention of initiating legislation that will permit government spending beyond the budget framework set for 2020.
At the government meeting that approved the decision on isolating people arriving in Israel, Greenberg said that the estimate of the cost was based on an estimate that about 70,000 returning Israelis would be in isolation over a period of one month.
The cumulative economic damage from quarantining up to now is estimated at NIS 1 billion.
The main damage is from loss of working hours. Further damage is to exports, because of flight cancellations, although the Ministry of Finance believes that alternatives will be found within a short time.
The quarantining regulations will also affect tourism, but the Ministry of Finance estimates that incoming tourism had already dropped by about 50% because of the pandemic. Greenberg also expects a fall in private consumption because of greater pessimism on the part of consumers, who are likely to cut spending, fearing that their incomes will be hurt.
The Ministry of Finance places high hopes on the expansion of credit to the fund for assisting small and medium-size businesses by NIS 2 billion, and on the pressure being brought to bear by the Bank of Israel on the commercial banks to provide credit to businesses experiencing cash flow difficulties. Greenberg said that the provision of credit was a focused measure that did not involve moral hazard. She said that the Ministry of Finance had examined other measures, and had looked at what other countries were doing. She mentioned as an example Singapore, which had distributed vouchers to its citizens to encourage them to go out and spend, but she said that this idea was dismissed because it was out of step with the atmosphere of fear of going out to places of entertainment and to shopping malls.
58 cases of coronavirus have been reported in Israel so far.
Published by Globes, Israel business news - en.globes.co.il - on March 10, 2020
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