The delta outbreak in Israel poses a risk to the economy, but the country’s central bank governor expects the recovery to continue for now.

Amir Yaron of the Bank of Israel said authorities are monitoring whether new cases of the Delta tribe, first discovered in India, lead to serious illness and hospitalization.

“Hopefully that’s not the case, in this case our basic approach is that we’ll still see each other well,” he said, referring to the country emerging from the economic crisis.

“In 2021 and through the end of 2022, we will basically be very close to where we should be before the pandemic,” he told CNBC’s Hadley Gamble on Monday.

The interest rate is where it is and is accommodating, allowing the economy to continue getting out of the pandemic in this extra fast way.

Amir Yaron

Governor of the Bank of Israel

Delta risk

Israel reported 496 Covid cases on July 5, an 88.1% increase from a week ago, according to Our World in Data.

After a swift rollout of the vaccine, the country initially lifted restrictions and raced for a return to normality after the pandemic. But authorities have since reintroduced some coronavirus measures after the Delta variant began to spread across the community.

According to Our World in Data, Israel fully vaccinated 59.8% of its population while 65.2% received at least one dose of a Covid vaccine.

Ultimately, the biggest factor is whether you are pressuring the hospital and medical care in a way that the numbers can’t handle. It doesn’t look like it at the moment.

Amir Yaron

Governor of the Bank of Israel

Israeli state budget

Yaron told CNBC that Israel needs to pass its state budget and the country needs to invest in the future.

“We definitely need this state budget,” he said. “That is the work plan for the economy in the long run … we have to do what many other countries have to do, which is invest in infrastructure, invest in education as the economy moves forward, especially the high-tech industries.”

The country will also need to invest in human capital, he added.

Israelis wear face masks in a Jerusalem mall on June 25, 2021.

EMMANUEL Dunand | AFP | Getty Images

Israel plans to pass its first state budget since March 2018 in November this year, after a new coalition government was approved by parliament last month.

The central bank governor said Israel must advance its economy over the next decade to grow and make the right investments.

“The challenge will be to use them in a very responsible fiscal way so that … the debt-to-GDP ratio is stable for the next few years,” he said.