Finance Minister Bezalel Smotrich on Tuesday presented a NIS 1.6 billion ($537 million) assistance package intended to help Israeli startups and tech firms cope with the steep appreciation in the shekel, which harms their competitiveness and makes operations in Israel costlier and less viable.

“We now understand the great challenge facing Israeli high-tech, which is a combination of the AI revolution, coupled with the vast appreciation of the shekel,” said Smotrich.

“The problem is not the strong shekel rate as it is probably going to be the new normal, which in itself is an expression of the strength of the Israeli economy,” Smotrich added. “The problem is the rapid pace at which the shekel has strengthened and the difficulty and challenge of export-oriented industries in adapting to changes at such a pace.”

Smotrich reiterated his plea to the Bank of Israel to do its part as the body entrusted with fiscal policy.

“For some time, I have expressed that a significant reduction in interest rates, which will affect the exchange rate, is the policy response that can best support and accelerate economic growth,” said Smotrich.

For weeks, local tech exporters and manufacturers have been warning that the strength of the shekel, which last month reached a 33-year peak against the dollar trading at around 2.80, poses a serious risk to major growth engines of the economy. Year-over-year the local currency has been strengthening by more than 20 percent against the dollar.

In response, the government established at the beginning of June an inter-ministerial task force to help the tech sector cope with the effects of the shekel’s fast rise in value, which has already led to mass layoffs and fears that startups and tech companies will increasingly depart for cheaper markets.

The lion’s share of the new assistance program, budgeted at NIS 1 billion, is being allocated to a fast-track funding support program operated by the Israel Innovation........

© The Times of Israel