Israel Raises Sovereign Wealth Fund Revenue Forecast to Up to $75 Billion from Gas Royalties
Israel's Tax Authority has updated its revenue forecast for royalties from gas and oil profits, increasing the expected income by 6% after excluding 2025. This revision reflects a higher estimate of proven and probable gas reserves in the Leviathan field, as well as a 2% rise in expected gas sale prices. The sovereign wealth fund, known as the Citizens' Fund, is now projected to receive between $60 billion and $75 billion from gas royalties until the depletion of the reserves, up from last year's estimate of $57 billion to $74 billion.
The increase is mainly due to the upward revision of Leviathan's gas volume estimates and higher average gas prices, possibly influenced by rising oil and gas prices amid tensions with Iran. Despite already collecting $2 billion from the gas fields, the fund is expected to accumulate between $72 billion and $77 billion over the entire lifespan of the reserves. For 2026, the Tax Authority forecasts revenues to the fund between $500 million and $600 million.
The Citizens' Fund, Israel's national wealth fund, accumulates a portion of the state's income from gas companies in exchange for extraction and sales within Israel's economic waters. Unlike regular royalties that go directly to the state budget, the fund includes the Sheshinski tax, which applies progressively on profits exceeding a certain threshold, currently affecting only the Tamar field. Leviathan's inclusion was postponed due to an expansion project increasing investments and expenses to boost annual production.
The fund began operating in 2022 after reaching one billion shekels and allows annual withdrawals of 3.5% of accumulated assets for renewable energy and employment projects in the Negev. From 2030 onward, withdrawals can also include profits generated by the fund. This mechanism aims to avoid the "Dutch disease," which could strengthen the local currency excessively and harm export sectors if large sums were spent at once.
Critics from Lobby 99 highlight past forecasts have not met expectations, with billions promised from natural resource profits never materializing. They call for greater transparency from the Tax Authority to ensure the public receives its fair share and to prevent exploitation of tax loopholes by gas companies and the Dead Sea Works. The article notes ongoing disputes between the Finance and Defense Ministries over a $40 billion gap and mentions recent defense purchases of radar systems to counter Hezbollah drones.
