As the shekel surges, Finance Ministry drafts relief plan

The Finance Ministry team examining the impact of the dollar’s collapse on the high-tech sector has drawn its first interim conclusions. At the center of the recommendations is the formulation of a grant program for distressed high-tech companies and work on a new tax policy. At the same time, the ministry says it has no ability to influence the exchange rate and is shifting responsibility to the Bank of Israel, which has already begun to act.

According to the brief updates, the ministry’s examination team is expected to recommend a grant program for companies in difficulty. Staff work on a tax policy will be advanced, with the aim of reflecting it in the 2027 budget. Finance Ministry officials say only the Bank of Israel can affect the exchange rate.

In the high-tech sector, officials say the dollar’s collapse is causing mass layoffs and companies to leave. The team established at the Finance Ministry to examine the impact of the dollar’s collapse on the high-tech industry is expected to recommend grants for distressed companies. The team’s interim conclusions are expected to call for a grant program developed in cooperation with the Israel Innovation Authority, focusing on keeping investments in Israel and attracting new investment from abroad.

The interim recommendations are expected to focus on three main tracks, fast grants with minimal bureaucracy for companies in distress, increasing productivity in companies and in the sector in cooperation with the Israel Innovation Authority, and staff work on tax policy, which will be reflected in the 2027 budget.

However, Finance Ministry officials say the main tool for influencing the exchange rate lies with 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, Bank of Israel Governor Prof. Amir Yaron signaled that interest rates are expected to fall faster 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 high-tech industry leaders and senior Finance Ministry officials, during which they presented troubling data from the Manufacturers Association that we reported 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 Department director Mahran Proznper, Chief Economist Shmuel Abramzon, Tax Authority director Shai Aharonovich, and Israel Innovation Authority CEO Dror Bin.