Company News

Israel expands economic aid to businesses and self-employed by $3 bln

JERUSALEM, Sept 22 (Reuters) - Israel’s cabinet has approved an extra 10.5-billion-shekel ($3-billion) aid package to help businesses and self-employed workers cope during a new nationwide lockdown to curb the spread of COVID-19.

The cabinet also authorised 10% salary reductions to members of parliament, the prime minister and other well paid government officials just before midnight on Monday.

Israel has approved economic aid of some 140 billion shekels through 2022 -- 85 billion in 2020 alone -- but Prime Minister Benjamin Netanyahu has been criticised by businesses that say the funds have been slow to arrive.

Grants are slated to go to businesses whose revenue falls more than 25%, the Finance Ministry said.

Israel entered a second lockdown on Friday at the onset of the Jewish holiday season and residents must stay mostly at home following a resurgence in coronavirus cases. In the past week, new infections have exceeded 5,000 on some days.

The economy is still reeling from the first lockdown in March and April.

The economy shrank an annualised 29% in the second quarter from the prior three months. The jobless rate, including those on unpaid leave, stands above 11%, according to the statistics bureau. A contraction of up to 7% is forecast for 2020.

Bank of Israel Governor Amir Yaron, who criticised some of the earlier fiscal steps, told cabinet ministers the latest COVID-19 increase was harming economic activity and that he backed the latest aid as it gives employers incentives to retain workers.

“The new morbidity wave in which we find ourselves is having a detrimental impact on economic activity and on employment,” Yaron said.

The latest plan “is an important and helpful step that will assist businesses in getting through the closure and being prepared to increase their activity and employment once the morbidity levels subside,” he said.

$1 = 3.4566 shekels Reporting by Steven Scheer, Editing by Timothy Heritage