Finance Ministry urges immediate partial reopening of economy amid war

The Finance Ministry estimates that sweeping restrictions on economic activity imposed during the first week of the war will cost the economy 9.5 billion shekels (about $3 billion), according to an urgent letter sent Wednesday by the ministry’s director general to the head of the military’s Home Front Command.

In the letter, Director General Ilan Rom called on Home Front Command chief Maj. Gen. Shai Kalper to immediately ease some of the restrictions in order to prevent what he described as massive losses to businesses and the state.

A shuttered shopping mall amid Iran war

(Photo: Assaf Levy)

Rom wrote that under the current defensive policy, most economic activity has been broadly shut down, with the exception of businesses classified as “essential,” and that educational institutions remain closed.

The restrictions under the highest alert level — known as “red” — are currently set to remain in place at least through Saturday, marking eight consecutive days since the start of the war. Rom said that at this stage it is not possible to determine with certainty that the level of risk justifies maintaining such sweeping closures.

“There is no dispute over the need to preserve a defensive policy adapted to the security situation,” Rom wrote. “However, the broad closure of the economy carries heavy economic costs.” He said a solution must be found that addresses both security needs on the home front and the country’s economic requirements, particularly after more than two and a half years during which the economy has borne significant costs due to rising security demands and the wider effects of war.

Rom said that even a measured reopening of the economy would reduce the war’s economic toll and help maintain Israel’s economic resilience, preserving the ability to meet both civilian and security needs.

Finance Ministry Director General Ilan Rom

(Photo: Baruch Greenberg)

He proposed that Home Front Command shift as soon as possible to a “limited activity” alert level — known as “orange” — instead of the current “red” level, allowing broader economic activity to resume as early as Thursday, March 5.

Under the “orange” guidelines, economic activity would be permitted provided workers can reach protected spaces, while the ban on educational activity would remain in place. The requirement to remain near protected areas would continue to apply.

The Finance Ministry estimates that under the “orange” level, weekly economic losses would total about 4.5 billion shekels — less than half the current cost of maintaining a full shutdown.

If the current restrictions continue, the state would be required to compensate businesses and workers for the closure of hundreds of thousands of workplaces and employee absences, adding further strain to the national budget and potentially increasing the deficit by billions of shekels beyond the direct costs of managing the war, officials said.