Israel To Set Up $80 Billion Sovereign Wealth Fund
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Israel will begin using revenues from its newly-found natural gas fields to establish a sovereign wealth fund, said the Israeli Prime Minister’s office on Sunday during a draft law presented to the cabinet.
The fund is expected to have at least $80 billion under its management by 2040, and will be tasked to protect the country’s financial stability during times of national emergency, as well as to provide a stable income stream for government-approved education and defence projects.
Israel will begin using revenues from its newly-found natural gas fields to establish a sovereign wealth fund, said the Israeli Prime Minister’s office on Sunday during a draft law presented to the cabinet.
The fund is expected to have at least $80 billion under its management by 2040, and will be tasked to protect the country’s financial stability during times of national emergency, as well as to provide a stable income stream for government-approved education and defence projects.
[quote]“True, the fruits of this fund will arrive only in a few years, but they will arrive,” said Israel’s Prime Minister Benjamin Netanyahu, as cited by the Financial Times. “This will be a lot of money for the state of Israel from royalties from natural gas under the sea.”[/quote]Related: Israel: The Saudi Arabia of Shale Oil ???
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Since 2009, the Israeli government has managed to discover numerous natural gas fields off its coast. The largest, named the Leviathan field, is located about 130 kilometres off the coast of Haifa, and is estimated to contain about 14-20 trillion-cubic feet of gas – worth around $40-50 billion. Experts believe that Israel’s total offshore natural-gas reserves could be worth at least $100 billion.
According to a joint-statement by the Prime Minister’s office, the Israeli Finance Ministry and the Bank of Israel, the newly created fund will invest the bulk of its money abroad and be managed according to legislated rules, which have not yet been set. Both the Bank of Israel and Finance Ministry will be involved in supervising the fund.
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Still, some Israeli members of parliament question whether a part of the natural gas revenues should actually be allocated back into monitoring the drilling process off the Israeli coast.
Environmental Protection Minister Gilad Erdan argued that Israel must be prepared to deal with potential marine pollution disasters that could occur as a result of drilling, such as the enormous oil spill in the Gulf of Mexico in 2010.
“The financial and environmental damage from the [2010] Carmel fire would pale in comparison to a pollution incident in the Mediterranean Sea,” said Erdan in a press statement cited by the Jerusalem Post.
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[quote]“Unfortunately, today we are unable to stand up to such potential damage. We must use part of the royalty funds toward building prevention and coping mechanisms for marine pollution incidents, and not allow them to be swallowed up by the general state budget.”[/quote]
