State offered millions to help builders: No takers

The government has offered of hundreds of millions of shekels in assistance to builders, but so far not a single contractor has taken advantage of the benefits being offered, TheMarker has found. Possibly their condition was not brought as low as many indicated at the height of the global economic crisis.

The government program was meant to assist contractors who complained in late 2008 and early 2009 of a shortage of available credit, a situation stemming from the global economic crisis that made it difficult for them to acquire land for new projects.

Under the program approved by the Knesset Finance Committee in June 2009, the state allocated NIS 200 million to guarantee bank loans to finance residential projects. At the time it was agreed that the amount would be increased, based on demand, to NIS 500 million. The program was instigated by the Association of Contractors and Builders in Israel and gained the backing of the Finance and Housing and Construction Ministries.

In a press release issued following the Finance Committee's decision to approve the assistance program, the association said that based on an inquiry it conducted in April 2009, 48% of all contractors were experiencing difficulties in procuring credit for new projects.

Association Director General Yossi Gordon noted at the time that "approval of the program would enable banks to increase the amount of credit extended to contractors so that they will be able to start on new projects, with state participation in the banks' risk."

But in practice, as noted, it seems that the assistance was offered without their being any true need in the market.

"As far as we are aware, based on bank reports (with whom the agreements were signed), up until now contractors have not sought to take advantage of the state guarantee, apparently in light of the economy's improvement," the Finance Ministry now admits.