More projects underway (Illustration)
צילום: שאול גולן
Knesset's Finance Committee okays Construction aid
Sector to receive NIS 200 million in State funded bank guarantees meant to ease credit crunch. Total financing may reach NIS 500 million
The Knesset's Finance Committee green-lighted the Treasury's plan to boost construction enterprises Tuesday, giving the joint Finance Ministry, Association of Contractors and Builders in Israel and Construction (ACBI) and Housing Ministry venture the thumbs up.
The plan is meant to aid the Construction sector's credit crunch: The State will fund NIS 200 million (approx. $51.16 million) in bank guarantees meant to ensure contracture will be able to receive bank loans to finance their projects. Should the move prove successful, the State will increase the guarantees to NIS 500 million ($128 million).
"This plan is a must in view of the sector's credit crunch and the drop in new construction projects," Yossi Gordon, head of the Association of Contractors and Builders in Israel said, adding that according to the ACBI's data, 48% of all contractors have difficulties getting the credit they need in order to finance new projects.
Nevertheless, Gordon said that some of the Treasury's eligibility guidelines under the new plan were too strict, prompting the sides to agree to review them again within a few months.
Shlomi Ben Ezri, head of the New Contractors' Association, said the funds allotted as part of the government's aid "were not enough to answer the sector's needs. We will see how once more, the bigger companies will enjoy the aid, while the smaller contractors will be fighting to make ends meet."
The banking sector seems ambivalent about the new aid plan. A senior member of one of the larger bank said that the plan "gives the impression the banks are the problem here, but that isn’t so. We never cut funding – credit allowances have dropped, true, but only because the contractors' demands went down.
"When credit requests are up again, State funding may very well reduce financing terms," he added.
