Finance Minister Silvan Shalom has agreed to help out the shrieking tourism industry with state-guaranteed loans.
Shalom has decided to set up an NIS 400 million fund to help out hotels, which are collapsing in droves as tourists continue to shun Israel. The state will guarantee 70% of that sum.
"Acknowledging that the hotels are in integral part of Israel's infrastructure, and that their continued functioning is in the long-term national interest, a decision has fallen to establish a mechanism combining state guarantees and subsidized interest" to help the cash-starved hotel industry, Shalom said.
The guarantees will free the banks to increase working capital loans to hotels, giving them some breathing room. Loan sizes will be contingent on several criteria to be agreed on between the Tourism Ministry and the Hotels Association, including the size of the hotel. A bank may extend only one such loan per hotel, up to an agreed-upon ceiling. The state umbrella gets refurled in March 2009.
The interest subsidy will apply throughout the loans' lifetime according to a key to be derived from the number of visitors to Israel.