Jul.06, 2012 | 5:31 AM–The Finance Ministry this week sought comment from other government ministries on a draft bill that would formally establish a state fund for government royalties from natural gas production.
Under the bill, an investment committee would establish investment policy for the huge sums expected to be received by the state in the coming decades from underwater natural resource exploration off Israel’s Mediterranean coast.
The fund’s assets would be deposited in a special account at the Bank of Israel and would be managed by a separate central bank staff.
According to estimates, gas drilling operations off Israel’s coast will generate a total of $100 billion to $130 billion by 2040, of which the state would receive half. Three and a half percent of the assets in the fund would be diverted every year to the current state budget, according to the draft bill.
The bill also provides that the fund would begin operations only after NIS 2 billion in proceeds have been accumulated. Most of the proceeds are expected to be invested abroad to head off the Israeli equivalent of so-called Dutch disease. This is a reference to the circumstances that in the 1960s caused the value of the Dutch currency at the time, the guilder, to rise substantially following the discovery of vast natural gas reserves in the Netherlands. The new resources pushed up the value of the guilder and made other Dutch exports less competitive in the process…Read More>>