With the Shekel Surging, Treasury Mulls Relief Plan

The Finance Ministry’s examination team on the impact of the dollar’s slump on the high-tech sector has drafted its first interim conclusions. At the heart of the recommendations is the formulation of a grant program for struggling high-tech companies, alongside work on a new tax policy. At the same time, the ministry says it has no ability to influence the exchange rate and is passing responsibility to the Bank of Israel, which has already begun acting.

According to the interim conclusions, the team is expected to recommend drawing up the grant program in cooperation with the Israel Innovation Authority, with a focus on keeping investments in Israel and attracting new investment from abroad. The recommendations are expected to focus on three main tracks, quick grants with minimal bureaucracy for companies in distress, improving productivity within companies and the sector in cooperation with the Israel Innovation Authority, and a policy review on taxation that would be reflected in the 2027 budget.

However, officials at the Finance Ministry say the main tool for affecting the exchange rate is in the hands of the Bank of Israel, and that the ministry cannot and will not try to intervene. The central bank is already acting, last week the Bank of Israel revealed that in May it intervened in the foreign exchange market and bought $801 million, in what was described as a step to maintain the orderly functioning of the markets. At the same time, Governor Prof. Amir Yaron signaled that interest rates are expected to fall at a faster pace than earlier market estimates, which led to a steady strengthening of the dollar against the shekel.

The review team was established last week after an emergency meeting between leaders of the high-tech industry and senior Finance Ministry officials, where they presented troubling data from the Manufacturers Association that we exposed in the main edition: 62% of companies in the sector are laying off workers, and 47% are shifting their activity abroad. Industry leaders then warned that within six months dozens of companies could face closure.

The team is headed by the economic adviser to the Finance Minister, Natan Nahorai, and includes the Budget Division head Mahran Pruznפר, Chief Economist Shmuel Abramzon, Tax Authority Director General Shay Aharonovich, and Israel Innovation Authority CEO Dror Bin.