Minister of Finance Moshe Kahlon convened a special discussion today on the impact of the appreciating shekel on Israeli industry.
Against a background of high volatility in the shekel-dollar exchange rate in the past few days, and the rate's drop to a low not seen in years, Minister of Finance Moshe Kahlon convened a special discussion today on the effect of the exchange rate on the Israeli economy. The shekel has strengthened sharply against the euro as well.
Among the participants in the discussion were Minister of the Economy and Industry Eli Cohen, Deputy Minister of Finance Yitzhak Cohen, Manufacturers Association of Israel president Shraga Brosh, Ministry of Finance director general Shai Babad, Commissioner of Capital Market, Insurance and Savings Dorit Salinger, Budgets Commissioner Amir Levy, Ministry of Finance chief economist Yoel Naveh, Accountant General Rony Hizkiyahu, Israel Tax Authority director Moshe Asher, and Israel Export Institute chairman Ramzi Gabbay.
The consequences of the strengthening of the shekel against the dollar and the euro for the Israeli economy were considered, and senior government officials surveyed the impact in their own areas of responsibility and presented possible solutions.
At the end of the discussion, Kahlon instructed that the Committee for Strengthening Industry headed by Babad should convene on Thursday. Kahlon decided that the committee should discuss how to allocate NIS 100 million budgeted for technological education, and an accelerated depreciation track for encouraging investment in industry.
"A strong shekel is not a crisis," Kahlon said, "It's a result of a strong economy. The Israeli economy has had one of the best years in its history, and the strengthening of the shekel is a direct result of the strong economic figures. At the same time, we cannot ignore the damage to exports, and alongside the Bank of Israel's short-term monetary actions, we must put our shoulders to the wheel to outline policies for strengthening industry and boosting productivity in the long term. The government of Israel will not abandon the exporters."
Brosh added, "I welcome the fact that the minister of finance called the meeting, and the teamwork and joint efforts towards strengthening the Israeli economy. Weaker foreign currencies threaten all sectors of industry, as there is no sector capable of absorbing appreciation of 10% against the euro or 15% against the pound sterling or even 5% against the US dollar.
"The solution is raising productivity, and that can come only if we invest immediate resources in education and technological training, and in reducing regulation. The high costs of production in Israel must be lowered, starting with municipal costs. I also call on the Bank of Israel to continue the monetary actions that are rescuing exports at this time. I ask that the Committee for Strengthening Industry should sit day and night in order to submit recommendations within a month, and thus provide both short-term and long-term solutions for Israeli industry."
Published by Globes, March 6, 2017