The Ministry of Finance today announced Minister of Finance Yuval Steinitz's bill for a sovereign wealth fund for the government's take on natural gas profits has been approved by the ministerial legislative committee. The bill's approval follows the recommendations of the Sheshinski Committee and the committee set up by Prime Minister Benjamin Netanyahu, Steinitz, and Governor of the Bank of Israel Prof. Stanley Fischer to review the management of the state's revenues from Israel's natural resources.
National Economics Committee chairman Prof. Eugene Kandel chaired the committee. Its members included the Ministry of Finance's budget director and accountant general, the deputy attorney general, and Fischer.
The committee's recommendations are based on international experience with sovereign wealth funds. The guiding principle is to benefit future generations through long-term management of the profits. Each year, the current profits from the return on the fund's investment will be allotted for socioeconomic and educational purposes, as determined by the government on the basis of the prime minister's statement on the matter. If needed, the fund's money will also help deal with unexpected events that could have a negative effect on the national economy, such as a war or earthquake.
The finance minister will head the sovereign wealth fund council, which will set the fund's investment policy and oversee its implementation. An expert investment committee will be established, which will comprise government and public representatives to implement the fund's investment policy. Management of the assets and their investment will be carried out by an expert committee set up for this purpose at the Bank of Israel.
Steinitz said, "We are now completing the historic measure that we started with the Sheshinski Committee. The sovereign wealth fund we established to day will be an insurance policy for the country, channeling resources to social budgets and protecting export industries."
Published by Globes [online], Israel business news - www.globes-online.com - on October 23, 2012
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