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.
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Tamar gas field in the Mediterranean Sea off the coast of Israel
(Photo:Albatross Aerial Photography)
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.
The fund, aimed at staving off an overheated currency from the sudden explosion in national wealth - known as the Dutch disease - was supposed to begin in 2018, but political turmoil and a slower stream of revenue have caused delays.
The minimum needed to begin investing NIS 1 billion ($290 million) - will not be reached before the end of 2021, said Abir.
"Part of that is because the companies involved were able to offset some of the tax against the investments that they have made and it slowed down the process," he said.
At a parliamentary hearing on Tuesday, Abir said political stalemate with three elections in 2019 and 2020 had also delayed the formation of a committee to oversee the fund.
He said tax income may not be released for wealth fund investments, to be managed by the central bank, until 2023.
Abir's predecessor, Nadine Baudot-Trajtenberg, who spearheaded efforts to form the fund, has said the central bank will likely take bigger risks with the gas money than with its $147 billion in forex reserves.
"It will have a higher-risk profile like simple assets, like stocks and corporate bonds," she said.