2024-01-30 18:11:00
The Bank of Israel is requesting 7.4 million shekels for the management of the investment portfolio of the Fund for the Citizens of Israel (also called the Wealth Fund), compared to less than one million shekels in 2023. A significant increase in expenses intended, according to the bank, for the purchase of technological means, salaries, external consulting and databases for making investments . The question arises, why does the bank need so much money to manage an investment portfolio? Could it be better to simply invest the money in solid financial instruments such as bonds or one ETF or another?
According to the Finance Committee headed by MK Moshe Gafni, the assets of the Fund for the Citizens of Israel at the end of 2023 amounted to approximately 1.48 billion dollars, with a return of 17.56% in 2023. 59% of the amount in stocks, 36% in bonds and 5% in cash.
The Chief Economist’s Division at the Ministry of Finance estimates that in 2050, the fund for the citizens of Israel, in the base scenario, will have approximately 42.3 billion dollars. Israel Citizens Fund, better known as the Wealth Fund, manages the income of the State of Israel from levies on profits derived from natural resources including natural gas, oil and potash. This is part of a long-term economic view. The goal is to enable the continued existence of the fund for many generations.
The Finance Committee discussed today (Tuesday) the Bank of Israel budget proposal for 2024 with the participation of Bank of Israel Governor Prof. Amir Yaron. The entire bank’s budget for 2024 currently stands at NIS 1.25 billion, 12.7% higher than the 2023 budget, which was about NIS 1.1 billion. The credit data sharing section in the 2024 budget stands at approximately NIS 95.8 million, approximately 17.3% lower compared to 2023. According to the Bank of Israel’s explanation, the decrease is mainly due to the postponement of projects resulting from extensive reserve mobilization. In addition, the establishment of a new fund project is planned Credit for small and medium-sized businesses that is expected to contribute to increasing access to credit for these businesses as well as promoting competition in the credit market.
The money printing section in the 2024 budget stands at approximately NIS 108.1 million, approximately 34% higher compared to 2023. According to the explanation, the increase is due to an increase in the demand for cash, and is also affected by the costs of raw materials and transportation. The investment section in the 2024 budget stands at approximately NIS 68.1 million, approximately 50.2% higher. According to the explanation of the Bank of Israel, the increase is mainly due to new projects in the fields of technology, currency, as well as infrastructure for payment systems. As of December 2023, the total cash turnover was NIS 129.1 billion, compared to NIS 80.6 billion in January 2020.
As of the end of November 2023, the bank’s total balance sheet was approximately NIS 850 billion, of which approximately NIS 742 billion were in foreign currency assets. The Bank of Israel’s foreign currency balances in December 2023 were approximately $204.6 billion, an increase of approximately 5.4% compared to December 2022. The total budget for the authorization to commit for 2024 is approximately NIS 781.5 million, and mainly includes: printing money – 36.9% of the budget; Credit data sharing – 24.3% of the budget; and reserve – 17.4%. The sum of the labor cost items, i.e. salary and related costs, and the item and pensions in 2024 are expected to be about 69.1% compared to about 69.4% in 2023.
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