bank of israel's proposed
economic stimulous plan 

 

The Bank of Israel’s stimulus package proposal

Bank of Israel governor, Stanley Fischer, proposes NIS 4.4 billion ($1 billion) stimulus plan to combat the effects of the financial crisis on Israel’s economy.

The plan includes:

  • NIS 1.5 billion for special projects, including:
    • NIS 500 million for education projects
    • NIS 500 million for urban development projects
    • NIS 500 million for infrastructure projects
    • NIS 1.15 billion for industry and export, including:
      • NIS 750 million for R&D projects
        • NIS 1.8 billion infusion for the labor market, including:
          • NIS 555 million for unemployment benefits,
          • NIS 750 million for the implementation of a negative income tax
          • NIS 185 million for reducing the number of foreign workers

            Prospective outcomes:

          Outcomes (% change)

          2008

          2009

          2009 (with stimulus)

          GDP

          3.9%

          -1.5%

          -1.1%

          Business GDP

          4.3%

          -2.5%

          -2.1%

          Private consumption

          3.6%

          -0.5%

          0.1%

          Balance of Payments (in billions of dollars)

          1.8

          2.1

          0.6

          Unemployment rate

          6.1%

          7.8%

          7.3%

          Employment rate

          52.9%

          51.8%

          52.1%

          Government Deficit (as a percent of GDP)

          2.1%

          5.2%

          5.8%

          Source:  Bank of Israel *

          * The Bank of Israel is the financial advisor to the government and therefore its recommendations are not compelling. All budget matters are within the Ministry of Finance’s authority. Consequently, this plan would need to be approved by the Ministry of Finance as well as the Knesset.

            
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