Israeli Citizens' Fund

The Israeli Citizens' Fund (Hebrew: קרן לאזרחי ישראל‎‎, Keren LeEzraḥei Yisra'el) is a sovereign wealth fund (SWF) in Israel. It was established in order to handle the windfall profits expected from the discovery of the Tamar and Leviathan gas fields.

Without the fund, the economy of Israel would run the risk of the so-called "Dutch disease". This happens when a significant increase in revenue from one sector (such as natural gas) causes the local currency (the shekel) to strengthen, which in turn would make other sectors of the economy less competitive.

In November 2010 the International Monetary Fund recommended, in its Article IV Consultation, that Israel set up a sovereign wealth fund.[1] The OECD recommended likewise in 2011. The OECD estimates that its size by 2040 would be between 40 to 175 billion USD (that is, between 10 and 50 percent of Israel's GDP) depending on the rate of new discoveries.[2]

The law establishing the fund was passed by Knesset in July 2014.[3] The law states that the fund will begin operating a month after the state's tax revenues from natural gas exceeds one billion. This is expected to happen in 2017. The fund is managed by the Bank of Israel.

Notes

  1. ↑ "Israel, Article IV Consultation—Concluding Statement of the Mission". International Monetary Fund. November 29, 2010. Archived from the original on April 10, 2015.
  2. ↑ OECD Economic Surveys: Israel 2011. Paris: OECD Publishing. 2011. doi:10.1787/eco_surveys-isr-2011-en.
  3. ↑ http://main.knesset.gov.il/Activity/Legislation/Laws/Pages/LawSecondary.aspx?lawitemid=481584

References

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