After lengthy delay, Israel’s sovereign wealth fund to begin June 1

JERUSALEM, May 30 (Reuters) – Israel’s long-delayed sovereign wealth fund can start operating on June 1 now that taxes on profits from natural gas and other resources have passed the 1 billion shekel ($301 million) minimum, the Finance Ministry and Tax Authority said on Monday.

Finance Minister Avigdor Lieberman will sign an order to transfer 1.14 billion shekels in levies accumulated to date to the fund on Wednesday, the ministry and authority said in a joint statement.

Israel discovered huge deposits of natural gas in the east Mediterranean a decade ago and major production began in 2013.

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The wealth fund, aimed at insulating an overheated currency from the sudden expansion in national wealth, was set up in 2014 and was supposed to begin operating in 2018, but political turmoil and a slower stream of revenue have caused delays.

It is not yet clear what the fund might invest in but analysts believe it will be in assets such as stocks and corporate bonds on international markets, with profits gradually being brought back into Israel.

The Bank of Israel, Israel’s central bank, will manage the fund.

Some 3.5% of the 1.14 billion shekel total, or 40 million shekels, will be allocated for social, economic and educational purposes, in accordance with a bill the government will submit to parliament, the statement said.

“The money is returning to the citizens,” Lieberman said.

The fund reached its minimum thanks to gas sales last year from the offshore Tamar field, according to the statement. More recently the larger Leviathan field has come online, selling gas to Israel, Egypt and Jordan.

The Tax Authority said it is holding close to another billion shekels from levies whose status is not yet final.

Earlier in the year, Lieberman had estimated that the minimum would be met and the fund would begin operations this September.

($1 = 3.3182 shekels)

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Reporting by Steven Scheer and Ari Rabinovitch; Editing by David Holmes

Our Standards: The Thomson Reuters Trust Principles.

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