The Israel Public Broadcasting Corporation (IPBC) will take out a loan from the bank to cover the 12 million euro guarantee required by the European Broadcasting Union (EBU) for Israel to host the 2019 Eurovision Song Contest, it said Tuesday.

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In light of the Finance Ministry's refusal to provide the necessary funding, the IPBC will take out the loan without the involvement of the Treasury or the government, while the government will decide whether to cover the costs if the guarantee payment is forfeited in the case of war a higher power causing the cancellation of the event in Israel.

"The IPBC sees great importance in hosting the Eurovision in Israel, both because of the exposure it would give the State of Israel and because the competition would serve as an economic boost to Israel," the IPBC said in a statement announcing the decision.

Netta Barzilai wins 2018 Eurovision with 'Toy' (Photo: AFP)

"The IPBC believes the Israeli government will do all in its power to ensure a worthy and respectable Eurovision will be held in Israel and to fulfill the commitment of its ministers—which have been made in the media—about the funding of the competition," the statement added.

Inside sources said the IPBC's officials had to resolve the matter on their own, without the written commitment from the Treasury that they initially demanded.

"Our decision is very simple. We don't provide guarantees or indemnification," a Treasury official said. "The IPBC will have to take out a loan from the bank, and if a problem emerges and the guarantee money is forfeited, the matter will be brought to a discussion in the government, where a decision will be made whether this justifies indemnification."

"The attempt to extort a government through the media is wrong. This is our proposal—the IPBC can take it or leave it," the official added.

The Treasury official stressed the dispute was only about the guarantee payment, and not on the entire production cost. "We'll have a budgetary discussion on the funding and decide what will be the sum we'll allocate for the event," he said.

The production cost of the Eurovision in Israel is estimated at 35 million euro, and the IPBC was supposed to transfer the guarantee to the EBU by August 1. The EBU has agreed to give the IPBC an extension until August 14.

Israel won the 2018 Eurovision Song Contest with Netta Barzilai's "Toy," granting it the right to host next year's competition.

But despite his enthusiasm over the win, the prime minister refuses to allocate a budget for the competition, arguing the money should come from the IPBC's annual budget.

The IPBC, meanwhile, claims it would not be able to take the money out of its own budget unless it fires 200 employees or cuts down on original productions.

In an official statement, the EBU said Monday it had alternative plans for next year's Eurovision should Israel be unable to meet its obligations.

"Every year, the financial guarantees must be transferred to the European Broadcast Union even before work begins on the competition and the announcement of the host city. If a public broadcasting union cannot meet the entry requirements, we have alternative plans, just like any other major event being planned with many international parties," the EBU said.

Meanwhile, Tel Aviv Mayor Ron Huldai has offered a venue to host the Eurovision for free.

Eurovision winner Netta Brazilai with Tel Aviv Mayor Huldai (Photo: Kfir Sivan)

"We're willing to give the Tel Aviv Convention Center, but that's not the story here," he told Ynet on Tuesday.

"Instead of criticizing, they should deal with the issue itself. What is this behavior? 'If you don't do this, we'll close down the IPBC'?" he wondered.

"I call on everyone to regain their composure and instead of fighting, let's do something in good spirits for once... if they (the government) compromised with Hamas, we should (be able to) compromise among ourselves," he added.

Huldai also said he had no qualms about the Eurovision taking place in Jerusalem. "I'm in favor of anything that helps our capital, the holy city. If they decide to hold the Eurovision in our capital, I'll congratulate, and everything will be okay. On the other hand, I'm offering my services. They can take it if they want, or not take it," he said.