Only recently founded, The Israeli Citizens’ Fund is already falling way behind expectations. Israel’s Ministry of Finance released a report on its finances showing just $617 million held in assets at the end of 2022. The fund, which was established to handle Israel’s revenue from natural resources, was supposed to have as much as six times that amount by now.
The Israeli Citizens’ Fund launched in June 2022 and it was expected to have as much as $4 billion in assets by now.
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The Israeli Citizens’ Fund is a sovereign wealth fund (SWF) in Israel which was established in order to handle projected future windfall profits expected from the discovery of the Tamar and Leviathan natural gas fields in Israeli territory in the eastern Mediterranean. The fund is managed by the Bank of Israel. The Council of the Israeli Citizens’ Fund was established by the Knesset and is chaired by Israel’s Minister of Finance – currently Mr. Bezalel Smotrich – which is responsible for the establishment of the institutions of the Foundation and the officeholders of the Israeli Citizens’ Fund. It met for the first time on February 19.
In its first six months The Israeli Citizens’ Fund recorded returns of 1.2% from a variety of investments.
Finance Minister Smotrich said the fund was established to “preserve a portion of the profits of the natural resources that we get to enjoy in our generations for the benefit of future generations. It reflects an optimistic and long-term view that seeks to strengthen the economic stability of your country Israel and its energy independence from a long-term view for the benefit of our children, grandchildren and great-grandchildren.”
“This is the first year that we get to use the fund’s profits and from that point of view, and according to the provisions of the law,” he added, “we have decided to also use this will be done by way of investment for the benefit of future generations. We determined that the fund’s profits will be invested in education infrastructure and youth movements and strengthening Mental Health. We believe that investing in these long-term social goals is important and essential for the existence of a strong society that will put future generations on solid foundations.”
Without the fund, the economy of Israel could in the future run the risk of 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.
