Israel facing $16.9bn budget deficit, its worst in history

The economic consequences of the pandemic are set to push Israel’s state deficient to 58.2 billion shekels (16.9 billion), its highest rate in history.

Israel’s budget deficit has widened to 6.4 per cent of gross domestic product for the 12 months ending 30 June 2020, the Ministry of Finance reports, up from 6 per cent at the end of May.

According to The Globes, estimates are that by the end of 2020, the deficit could reach between 10-11 per cent.

Following a new surge in COVID-19 cases over the weekend, the Bank of Israel said it plans to purchase corporate debt for the first time.

The central bank said it will purchase 15 billion shekels ($4.3 billion) worth of corporate bonds, with the goal of reducing the cost of borrowing for companies and making more credit available to the economy, reported Bloomberg.

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“At the previous interest rate discussion, we hoped that at the beginning of July most economic activity would be returning to normal. Currently, it appears that the health situation is becoming more severe and that the risk of additional deterioration in the economic situation has increased,” bank governor, Amir Yaron, said at a news conference after the decision.

The Ministry of Finance added that as of the end of June it had spent 47 per cent of its promised ten billion shekel ($2.9 billion) economic rescue package.