Against the backdrop of the sharp and rapid appreciation of the Israeli shekel in recent months, and following weeks of roundtable discussions with key stakeholders-including startups, growth-stage companies, multinational corporations, investment funds, and industry representatives-Minister of Finance Bezalel Smotrich and senior Ministry of Finance officials today (Tuesday) unveiled an immediate support package developed by the joint task force established by the Ministry of Finance and the Israel Innovation Authority to strengthen Israel's export and high-tech sectors, with a total budget of approximately NIS 1.6 billion.
The package is designed to help Israel's export-oriented and high-tech industries address the challenges arising from the appreciation of the shekel, preserve the competitiveness of the Israeli economy, and reinforce the country's long-term growth engines.
Immediate Measures to Strengthen Israel's High-Tech Sector
- Approximately NIS 1 billion will be allocated to a fast-track support program for early-stage and growth-stage technology companies. Through matching grants, the program will help extend companies' financial runway, support continued growth, and enable them to maintain and expand their operations in Israel.
- An interministerial committee will be established to conduct a comprehensive review of the long-term global competitiveness of Israel's high-tech sector and examine potential structural reforms ahead of the formulation of the 2027 State Budget.
- Israel's high-tech sector is the country's primary engine of economic growth. The current package complements a series of strategic measures introduced by the Government in recent years to strengthen the sector, including the implementation of the OECD Pillar Two framework, the expansion of R&D tax incentives under the Law for the Encouragement and Incentivization of Research and Development, the establishment of the YOZMA Fund to promote institutional investment in high-tech with a budget of NIS 580 million, and the National Artificial Intelligence Program, a nearly NIS 3 billion initiative that includes investments in supercomputing infrastructure and human capital development, alongside the Israel Innovation Authority's ongoing support for innovation.
Immediate Measures to Strengthen Israel's Industrial Sector
- NIS 175 million will be invested in advanced manufacturing equipment and industrial modernization through grant programs under the Law for the Encouragement of Capital Investments and the Advanced Manufacturing Productivity Program.
- NIS 25 million will be allocated to support exporters by expanding the activities of the Israel Export Institute and providing grants through the "Pilots - Market Breakthrough" program.
- NIS 10 million will be invested in employer-led vocational training programs designed to equip workers with the skills required for high-productivity positions.
- The government will expand the accelerated depreciation tax incentive under the Law for the Encouragement of Capital Investments, at an estimated fiscal cost of approximately NIS 360 million.
The package reflects the Government of Israel's commitment to safeguarding the global competitiveness of Israeli exports, strengthening the country's industrial base, and ensuring the continued growth of the Israeli economy's principal growth engines, even during periods of heightened exchange-rate volatility.
Bezalel Smotrich, Minister of Finance, said: "Following the swift and focused work of the task force-which included extensive consultations, discussions, and meetings with a broad range of representatives from Israel's high-tech ecosystem-we are launching an immediate NIS 1.6 billion support package for the country's export-oriented industries. As the Ministry of Finance, we acted quickly in response to these developments. I also expect the Bank of Israel to rise to the challenge and respond accordingly.
For some time, I have believed that a significant reduction in interest rates is the policy response that can best support and accelerate economic growth. My message to technology companies and investors is clear: the State of Israel is experiencing a period of strong economic momentum. Those who invest here stand to generate substantial returns. Our economy is on a path toward even greater growth and prosperity than we have witnessed to date. This assessment is shared by leading economists and prominent investors around the world."
Maharan Frozenfar, Budget Commissioner at the Israeli Ministry of Finance, added: "The appreciation of the shekel and fluctuations in exchange rates present significant challenges for Israel's export industries and high-tech sector, which are among the country's primary engines of economic growth. The NIS 1.6 billion program we are introducing is designed to provide an immediate response to these challenges while continuing to invest in long-term structural measures that will strengthen the competitiveness of the Israeli economy.
The Ministry of Finance is committed to looking ahead, reinforcing Israel's growth engines, and equipping the economy with the tools it needs to address the challenges of the years ahead."
Dr. Shmuel Abramzon, Chief Economist, said: “Israeli industry, particularly its export-oriented and technology sectors, forms the backbone of the Israeli economy, driving growth and resilience. The sharp and rapid appreciation of the exchange rate presents a significant challenge for the business sector, particularly exporters and high-tech companies. At the same time, it makes it more difficult for startups that have raised foreign capital to achieve the milestones required to continue operating in Israel.
"The support package is intended to provide companies with breathing room during this challenging period, but it is not a substitute for the adjustments required by the new economic reality, foremost among them increased efficiency and continued innovation, areas in which Israeli industry has consistently excelled. Over the long term, the ability of the business sector to adapt and improve its operations in response to changing conditions, particularly during today's rapid technological transformation, will be essential to maintaining the resilience and global competitiveness of the Israeli economy. I am confident that we will successfully meet this challenge as well."
Dror Bin, CEO of the Israel Innovation Authority, said: "Today, we are deploying NIS 1 billion to strengthen the competitiveness of Israel's high-tech sector at a time when the rules of the global game are rapidly evolving. High-tech is Israel's primary engine of economic growth, accounting for 18.3% of the country's GDP and 58% of its exports. This funding will equip startups and mid-sized growth companies with the resources to navigate these changes while reinforcing Israel's attractiveness as a premier destination for research and development investment, even amid shifting market conditions.
"In the coming weeks, we will launch fast-track funding programs through which we will invest in both early-stage startups and growth-stage companies. As the entity entrusted with advancing innovation in Israel, our responsibility is to ensure that, even as the global landscape evolves, Israel remains the destination where companies choose to invest, develop breakthrough technologies, and scale their businesses. That is precisely the purpose of this initiative."