Israel Faces Decade-Long Infrastructure Lag, Bank Leumi Executive Warns

Liat Shuv, head of the business division at Bank Leumi, stated that Israel is lagging about a decade behind in developing modern infrastructure, a gap that must be closed to ensure continued economic growth. Speaking at a national infrastructure conference hosted by Bank Leumi and Calcalist, Shuv noted that while infrastructure and real estate projects are visible across the country, including road construction and light rail development, the pace of execution is insufficient to meet the economy's needs. She highlighted that despite significant investments, Israel is still playing catch-up rather than getting ahead.

Shuv pointed to the planned national projects, exceeding 429 billion shekels across transportation, energy, water, and other sectors, as significant investment opportunities. The Gush Dan Metro project alone, estimated at 177 billion shekels, is expected to fundamentally alter transportation and employment patterns in the region and is crucial to prevent future urban gridlock. She emphasized that such infrastructure investments are not mere budgetary expenses but long-term economic value generators, citing the metro's potential annual economic benefit of 34 billion shekels by 2040.

The growing demand for electricity, driven by the AI revolution and its need for server farms and data centers, adds another critical dimension. Israel's ambition to maintain its status as a technological powerhouse requires robust energy and computing infrastructure. While national energy plans aim for 26 gigawatts of renewable energy by 2035 and a 20 billion shekel investment in the electricity grid by 2030, Shuv cautioned that plans alone are insufficient.

She identified key execution challenges, including lengthy planning and licensing procedures, regulatory complexities, fragmented authorities, and inter-governmental coordination issues, all of which delay projects and increase costs without delivering immediate economic benefits. Shuv advocated for a shift in measuring success from approved plans and allocated budgets to the number of projects initiated, completed on time, and their actual economic contribution.

Shuv proposed a three-part model for progress: the state must set national priorities, ensure planning and regulatory certainty, and remove barriers; the business sector must provide entrepreneurship and execution capabilities; and the financial system must offer long-term financing solutions. She stressed that true value is created when these partners work in sync, accelerating project execution and transforming infrastructure from a growth impediment to a growth driver.