The Ministerial Committee on Legislation approved Tuesday a proposal by Finance Minister Yuval Steinitz to set up an independent fund to manage the fees and royalties derived from natural gas sales.
The fund's creation is meant to counter the possible "Dutch disease" effect – an economics concept that links the increase in exploitation of natural resources to a decline in the manufacturing sector.
It also refers to "any development that results in a large influx of foreign currency ,including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment."
The fund will be subjected to a special department that will be formed by the Bank of Israel and will manage all of the royalties derived from the various sales of natural gas harvested off Israel's shores.
The revenues will be invested in foreign stocks and bonds. The fund will be supervised by a board of directors, headed by the finance minister, as well as by a special BOI committee that will include public representatives.
The interest earned on the investments will be funneled into the State budget. The finance minister will have emergency proxy to use the funds, in case of a national emergency such as war or a severe recession.
"This fund will serve as insurance for Israel, it will appropriate funds for social budgets and will protect the industry," Steinitz said.
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