Gafni: Gov't must have restricted ability to take loans from future gas revenue fund

According to text of bill in current form, the state would be able to take a loan from the fund if a large-scale socioeconomic crisis occurred.

By
August 7, 2013 20:59
2 minute read.
Tamar natural gas rig.

Tamar natural gas rig 370. (photo credit: Albatross)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

When moving forward with legislation toward establishing a natural gas revenue fund, Knesset members must ensure that the government's ability to take a loan from such a fund is not too easy, MK Moshe Gafni (United Torah Judaism) warned on Wednesday.

In April, Energy and Water Ministry Silvan Shalom announced the government's intention to create a natural gas profit fund for the public revenues generated from the resource based on the Norwegian model – in which the fund's money is largely invested in foreign markets. Members of the Knesset's Science and Technology Committee on Wednesday discussed the bill toward establishing such a fund, specifically debating the procedure that the state must follow in order to take a loan from the fund, as described by the bill.

Be the first to know - Join our Facebook page.


According to the text of the bill in its current form, the state would be able to take a loan from the fund – subject to the approval of 65 Knesset members – if a large-scale socioeconomic crisis occurred. Loan repayment would be quite easy and available in a variety of ways, allowing for changes in interest rates or exemptions, members of the Science and Technology Committee said. As the chair of that committee, MK Moshe Gafni (United Torah Judaism) stressed that such a situation could cause Israel to become prey to the dreaded "Dutch Disease."

The Dutch Disease phenomenon characterizes a situation in which a large, unexpected increase in revenues from resources causes a sharp appreciation in the exchange rate and thereby prompts a decrease in the production and competitiveness of the tradable sector.

Because the bill requires the approval of only 65 Knesset members in order for the state to receive a loan, the legislation not only puts the country at risk of acquiring the Dutch Disease but also simultaneously "empties the fund's coiffeurs," Gafni argued.

"In practice, according to the bill, here in effect a parallel channel to the state's regular budget is being opened," Gafni said. "This would allow the government to reduce the budgets of its ministries under the assumption that it will be possible to receive the required sum from the fund's money."

In order to prevent such a situation, Gafni proposed that the approval of the budget for the fund occur only two months after the state's regular budget has been approved.

JPOST VIDEOS THAT MIGHT INTEREST YOU:


Any government decision regarding the gas profit fund should receive the approval from a joint Knesset committee with representation from the Finance, Science and Technology, Education and Labor and Welfare committees, Gafni added.

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

Holland Park’s forest, north of Eilat.
August 11, 2014
Promising trend of prosecution for environmental crimes, officials say

By SHARON UDASIN