NIS 11 billion package designed to soften the blow of credit and pension crisis in Israeli economy.
By JPOST.COM STAFFPublished: NOVEMBER 25, 2008 09:22Advertisement
Amid the global financial crisis, the Treasury announced Tuesday that it would intervene in the Israeli economy, unveiling a new plan to provide NIS 11 billion to banks and pension funds in light of stock market failures and in order to widen lending and credit markets.
The plan will be implemented in four steps:
A state guarantee of NIS 6 billion designed to mobilize banking funds for credit and lending needs.
The provision of a NIS 5 billion capital fund to protect pension funds and bolster the external credit market.
The establishment of a system to assist bond holders in reaching debt repayment arrangements with bonds issuers.
The passing of new legislation which would encourage and facilitate foreign investment.
"The aim of these steps is to strengthen the Israeli financial market and is in addition to the 'bailout plan' proposed last week which dealt with economic activity," the Treasury said in a statement. "The plan was set up by the Treasury, the Bank of Israel and Israel Securities Authority."
"Global credit tightening and the financial crisis in general demands such steps be taken", said Treasury officials.
Meanwhile, according to deputy governor of the Bank of Israel (BOI), Prof. Zvi Eckstein, the economy is facing another wave of redundancies, with thousands of workers set to lose their jobs.
Speaking to Army Radio on Tuesday morning, Eckstein said that the BOI was working well in its attempts to deal with the crisis, but that due to the upcoming elections, the Treasury was not operating adequately.
"We lowered interest rates twice due to the extraordinary crisis and the Bank of Israel (BOI) is working and monitoring the economy's financial stability," he said. "There are likely to be thousands of redundancies, one percent of the economy, but we have to remember that several of those made redundant find [other] jobs."
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