Credit builder loans from Israel’s national credit agency have helped hundreds of families repay their loans through government programs and are proving invaluable in helping the country avoid defaults, a senior official said Sunday.
In a report published Sunday by the finance ministry, the bureau estimated that the country had issued $1.2 billion in loans through the agency in the first nine months of 2017.
The figures came as the government’s financial watchdog warned of a “fatal economic shock” as new restrictions hit the sector.
A financial crisis is expected in the next two years, and the country is facing a $12 billion budget deficit.
The government has pledged to cut the deficit to 2 percent of gross domestic product (GDP) this year from the current 3.5 percent.
But with the government in the midst of a two-week-long economic crisis, it is now taking a cautious approach to help families with loans, the finance minister, Gideon Saar, told the government-run Israel Hayom daily.
He added that it would not be possible to reduce the debt by raising interest rates, and that the program was designed to ensure that the loans were repaid, rather than to take the bank to court.
“The loans are designed to help people with financial problems who are unable to meet their monthly payments and the government is willing to help them, but we are not going to allow them to default,” Saar said.
“I think the problem is a financial shock, a real one.
I don’t know how it will be solved.”
Saar, who was appointed finance minister in October, has said the government would increase the amount of government loans issued through the credit builder program from $500 million in 2017 to $1 billion in 2018.
The program has been one of the main sources of financial support for the country’s struggling economy.
It provides loans to borrowers who have a history of financial hardship and have not made the same payments for years.
The loans cover a broad range of needs, from mortgage payments to home repairs and renovations.
The program, which has grown in size since the last budget, was set up by Saar and his predecessor, Finance Minister Gideon Sa’ar.
It has also been used to help Palestinians in the occupied West Bank, and to help students who want to study in Israel.
Sa’ar and Saar’s predecessor, Moshe Kahlon, also made large loans to families with the program.
Kahlon said at the time that the loan program helped people who “are unable to make their monthly payment” due to their poor financial situation.
In the wake of the financial crisis, Kahlon was forced to step down.
Saar said the program had helped thousands of Israelis who were struggling with debt and were unable to find employment.
“We are talking about people who are on their way to retirement, people who have lost their jobs, people with medical problems.
We have help for these people,” he said.