Israel has pushed back the creation of a sovereign wealth fund because tax revenue from natural gas has not yet hit the minimum needed to begin investing, and fund managers have not yet been chosen, Bank of Israel Deputy Governor Andrew Abir said on Tuesday.
Israel discovered huge deposits of natural gas in the east Mediterranean a decade ago and major production began in 2013. Prime Minister Benjamin Netanyahu said tens of billions of dollars raised from taxing natural gas sales would be invested abroad via a sovereign wealth fund, with proceeds brought home for education, welfare and other services.
In 2013, the Bank of Israel had forecast that between 2018 and 2022, the fund would take in some $3.9 billion. But over the past four years, it hasn’t taken in any new money. According to the Knesset’s Research and Information Center, the last year natural gas royalties were collected was 2015, when some 125 million shekels entered the fund.
The center attributed the problem primarily to additional exploration and development costs at the Tamar gas field that were recognized for tax purposes, including expanding the field and laying an additional pipeline along the Ashkelon coast.
The minimum 1 billion shekels ($290 million) needed to begin investing will not be reached before the end of 2021, said Abir.
The fund is aimed at staving off an overheated currency from the sudden explosion in national wealth – known as the “Dutch disease” – and was supposed to begin in 2018.