Israel Innovation Authority halts startup grant approvals due to lack of budget | The Times of Israel

Israel’s Innovation Authority has warned that due to the lack of an approved government budget for 2020, it will not be able to allow new grants to Israeli tech firms.

In a notice to the public the the Innovation Authority — in charge of setting out the nation’s innovation policies and supporting early stage startups and technologies with grants to help them develop their ideas — the authority said that it expects to get an approved budget framework only at the end of the quarter. Only then will they be able to decide on new applications and approve new grants, the notification said.

Because Israel is holding to its third election within 12 months, due to a political stalemate, the government has not passed its budget for 2020. This means that government spending in 2020 will be based on a pro-rated version of the 2019 base budget, not including any extra spending made during the year.

Finance Ministry officials have warned that the lack of a budget for 2020 due to the country’s ongoing political deadlock is likely to have a negative impact on economic growth as ministries will find it harder to commission new projects and pay contractors. General elections are scheduled for March 2, and only after a new government is formed will a budget be approved.

The Innovation Authority emphasized in the notice that it has funds to pay for grants already approved in 2019, and payments for them will continue to be paid as planned.

Companies and entrepreneurs can continue to apply for new grants, the notice  said, and the authority will decide on the applications “upon receiving the approved budgetary framework for the Authority’s activities.”

Karin Mayer Rubinstein, the CEO of the Israel Advanced Technology Industries (IATI), an umbrella organization of tech firms and multinationals operating in Israel said that the political stalemate and lack of a budget are creating “chaos and paralysis.”

In a response to the notification of the Innovation Authority, she said that “the failure to make decisions and the suspension of the budget is a lethal and critical blow to the entire high-tech and life sciences sector and other advanced industries that live in a global business environment.”

This “business instability will lead to the fleeing of investors, Israeli companies and multinationals,” which could lead to a loss of Israel’s global competitive edge, Mayer Rubinstein said in an emailed statement.