Citizens of Israel Fund

The **Citizens of Israel Fund** (CIF) is Israel’s sovereign wealth fund, established to manage state revenues from the levy on profits derived from natural resources, including oil and natural gas. Created under the Citizens of Israel Fund Law, 5774–2014, it invests these receipts with a long-term economic perspective, seeking to preserve and grow a public financial asset for current and future generations. ^[1][2]

Purpose and background

The fund’s statutory purpose is to administer the state’s revenues from the natural-resources levy over a long horizon, maximize those revenues, and enable the fund to continue across generations. Its underlying rationale is that revenues from non-renewable resources are temporary: extracting and selling a finite resource converts natural wealth into financial income, which can otherwise be spent in the period it is received. Saving and investing part of that income provides a way to retain value beyond the period of extraction. ^[2][3]

The fund’s establishment followed the discovery and development of offshore natural-gas fields, including Tamar and Leviathan. The law was enacted in 2014 and subsequently amended to account for levies on profits from additional natural resources. The legislation established the fund’s objectives, institutions and decision-making arrangements, as well as conditions governing the deposit and use of its assets. ^[1][3]

The fund did not begin investing when the law was enacted. It commenced operations on June 1, 2022, after cumulative state receipts from the levy reached NIS 1 billion, the statutory activation threshold. The fund’s institutions were established earlier in 2022, enabling the investment-policy and governance arrangements to be put in place before operations began. ^[1][4]

Funding and transfers

The CIF receives state revenues generated by the levy on profits from oil, natural gas and other covered natural resources. This is distinct from the full value of resource production, company revenue or all taxes paid by resource businesses: the fund is specifically associated with the state’s proceeds from the statutory levy. Under the law, levy receipts are transferred to a designated account and converted into foreign currency for deposit. The fund’s assets also include investment earnings on those receipts. ^[2][5]

The fund is not designed to retain every dollar of earnings indefinitely. The law provides for an annual allocation to the State Budget, calculated according to a statutory formula and designated for social, economic and educational purposes. The annual allocation is a transfer from the fund to the state budget; it is separate from the fund’s investment return and does not mean that the state can freely withdraw the entire principal. ^[3][5]

The amount transferred in a given year depends on the governing legal framework and the fund’s financial position. For example, the fund’s 2025 annual report states that it transferred approximately US$51.7 million to the State Treasury that year. It also reports inflows of approximately US$350.7 million during 2025, derived from state revenues under the applicable natural-resources tax legislation. ^[6]

Governance and management

The fund’s institutional structure separates policy-setting and oversight from day-to-day portfolio management. Its Council and Investment Committee are responsible for setting the investment policy and overseeing the fund’s operation. The Council includes government representation, and the Minister of Finance chairs it; the fund’s governance also includes representatives of the Bank of Israel and the public. ^[4][5]

A dedicated division within the Bank of Israel manages the fund’s assets. The Bank’s role is to implement the policy established by the fund’s institutions, rather than to determine the fund’s statutory purpose. The management division conducts market analysis, develops and implements investment strategies, monitors performance and risk, and prepares financial statements for the Council. It also calculates and carries out the annual budget allocation after the required approval. ^[5][7]

This arrangement places the fund’s investment operations within the central bank while retaining distinct governance bodies for the fund itself. The legal framework and published fund reports describe the institutional responsibilities, policy process, financial performance and asset allocation. ^[2][6]

Investment policy and portfolio

The fund invests its assets according to an investment policy set by its governing institutions. Its stated investment objective is long-term financial management, including the pursuit of risk-adjusted returns within defined risk parameters. The policy and portfolio can develop over time as the fund’s institutions approve investment approaches and asset classes. ^[7][8]

As a sovereign wealth fund funded by revenues from natural resources, the CIF differs from a retail mutual fund or a personal savings account. It is a public institutional portfolio, funded by specified state receipts, and its investment horizon and withdrawal framework are determined by law and its governance arrangements. The investment results are exposed to movements in financial markets and currencies, as well as to the timing and amount of levy revenues. ^[2][6]

The fund publishes annual reports that describe performance, asset allocation, investment policy and financial statements. In its 2024 report, the fund reported assets under management of approximately US$2.079 billion, a nominal return of 11.5% for 2024 and an annualized nominal return of 33.2% since inception, as reported in that document. Such figures describe past results over specified periods; they are not guarantees of future returns. ^[8]

The 2025 annual report states that assets under management stood at approximately US$2.79 billion at December 31, 2025. It reports a nominal U.S.-dollar return of 18.4% and a real U.S.-dollar return of 15.4% for 2025. The report also describes the fund’s evolving asset allocation and expansion into additional asset classes. These figures are dated measures from the fund’s annual reporting and should not be treated as current values for later periods. ^[6]

Relationship to Israel’s public finances

The CIF links revenue from resource extraction to long-term public asset management. The mechanism involves several distinct stages: resource-related profits are assessed under the relevant legislation; the state receives levy revenue; qualifying receipts are deposited into the fund; the fund invests accumulated assets; and an annual allocation is transferred to the State Budget under the statutory rules. ^[2][3][5]

This framework is intended to distinguish volatile, finite-resource income from ordinary recurring public revenue. In principle, holding and investing a portion of resource proceeds can support a longer-term fiscal perspective than immediately spending all receipts. The fund’s official materials describe its mandate in terms of long-term management and the benefit of present and future generations. ^[1][3]

The fund is separate from Israel’s general government budget and is not itself a government bond or a direct claim held by individual citizens. Its assets are managed institutionally, and annual transfers are made to the treasury through the law’s allocation mechanism. Accordingly, references to the fund benefiting citizens describe its public purpose rather than an individual account or entitlement. ^[2][3]

Reporting and accountability

The CIF publishes financial reports and annual reports covering its activities. Its annual reporting includes information on governance, investment policy, performance, asset allocation and financial statements. The reports provide a basis for examining how levy receipts, investment results and transfers affect the fund’s assets over time. ^[6][8]

The fund’s reporting also makes clear that asset totals and returns depend on the period and measurement convention used. For example, nominal returns differ from real returns, which adjust for inflation, and results reported in U.S. dollars can be affected by exchange-rate movements. Comparisons between years therefore require attention to the reporting currency, time period and whether the figure is nominal or inflation-adjusted. ^[6][8]

Significance

The Citizens of Israel Fund is a central element of Israel’s approach to managing public income generated by non-renewable natural resources. Its legal mandate combines investment of levy receipts with a controlled annual budget allocation, while its governance places policy-setting with the fund’s institutions and investment execution within a dedicated Bank of Israel division. The fund’s scale and results change with new levy inflows, investment performance, currency valuation and statutory transfers. ^[2][5][6]