Leaders from economic groups on Sunday continued urging the government to find new ways of helping embattled businesses in the South as operation Protective Edge continued into its 20th day.
“Compensation from the Finance Ministry is not enough,” said Uriel Lynn, president of the Federation of Israeli Chambers of Commerce at an emergency meeting.
“The entire internal system in Israel must be enlisted to help businesses in the fighting zones.”
Lynn called on the Histadrut labor federation to keep labor disputes to a minimum through the fighting, banks to extend credit and be flexible with loans and repayment deadlines, local authorities to delay property tax payments from businesses, and credit card companies to expand lines of credit to reeling businesses.
Indeed, the Bank of Israel’s banks supervisor issued further easing measures for people and businesses in the 40 km. zone around Gaza on Sunday, as well as for reserve soldiers. The rules requested, for example, that the accounts not be frozen and checks not be returned as the fighting continues.
The Manufacturer’s Association of Israel repeated its oftsung chorus for the Bank of Israel to lower its interest rate, citing the shekel’s stunning resilience even through the war.
Critics said that lowering the rate further, or even to zero as the MAI is pushing, would have negative longterm repercussions, and further inflate housing prices and asset bubbles.
BOI is scheduled to make its monthly interest-rate decision on Monday, and some analysts expect that it will, indeed lower the interest rate from the current .75 percent to .5 percent to help spur economic growth.
Interestingly, despite the economic pain felt by people and businesses as a result of the constant rockets, Israel’s markets have stayed relatively stable throughout the operation.
“There still hasn’t been a really big effect on the markets, which indicates that people see this as something temporary,” said Rafi Aldor, a lecturer at IDC’s Arison Business school.
In part, he said, Israel’s ability to bounce back economically after similar outbreaks of violence in the past have prevented investors from running scared.
If the conflict continues for another week, however, they may start getting jittery.
“The longer it goes the more a long-term effect it will have,” Aldor said.
According to Channel 10, the operation was costing the Israeli economy a half-billion shekels a week, a higher rate than previous operations.
A Globes study early in the operation estimated that, if it were to continue for 20 days, it could cost the economy NIS 8.5 billion.
Although the Finance Ministry is remaining quiet on how Israel will deal with the fiscal repercussions of the operation, Finance Minister Yair Lapid will soon have to present his 2015 budget plan, and decide if he is going to raise taxes, cut programs or break the deficit target.
Labor MK Shelly Yacimovich on Sunday argued that increasing the deficit target was the best option.