JERUSALEM, June 19 (Reuters) - Israel is creating a system for new publicly traded funds to invest in a multi-billion dollar pipeline of infrastructure projects, a move that would lower finance costs and offer the public new investments with tax breaks.
Israel has the developed world’s most congested roads, something that has hampered economic growth, and the government is partnering with the private sector to unroll several massive transport projects to ease the pressure.
This includes a 9 billion shekel ($2.5 billion) extension to Jerusalem’s inner-city train and more than 10 billion shekels for the first lines of a light rail in Tel Aviv. It also has planned a number of water and energy related projects.
Only a small number of institutions have funded such enterprises in the past, making financing costs relatively high.
A government panel, backed by Israel’s securities and tax authorities and the Finance Ministry, recommended on Wednesday the establishment of infrastructure investment funds that within three years of being formed will list on the Tel Aviv Stock Exchange.
These funds, the panel said, will add sources for project financing, lower credit and capital costs and help the much-needed projects get built.
“The traded funds will be a new investment channel for the public and allow it to be a direct partner in investments in the field,” it said, adding that the investment will have tax benefits similar to real estate investment trusts.
At least 75% of the projects in which the funds will invest will be in Israel.
The new investment system still needs parliamentary approval. ($1 = 3.6082 shekels) (Reporting by Ari Rabinovitch Editing by Alexandra Hudson)