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IMFSurvey Magazine: Policy

Sovereign Funds Working Group to Meet in Santiago

Downtown Santiago, Chile: venue for meeting that aims to agree voluntary principles for investment practices of sovereign wealth funds (photo: Newscom)

WEALTH FUNDS WORKING GROUP

Sovereign Funds Working Group to Meet in Santiago

IMF Survey online

August 29, 2008

  • International Working Group of Sovereign Wealth Funds to meet September 1-2
  • Meeting seeks to reach understanding on voluntary principles, practices
  • Principles to guide investment practices by sovereign wealth funds

The International Working Group of Sovereign Wealth Funds (IWG)—comprising 26 member countries—will meet for the third time on September 1-2 in Santiago, Chile, to agree on a common set of voluntary principles and practices intended to guide investment practices by sovereign wealth funds (SWFs).

These principles cover areas of the legal framework, governance and institutional structures, and investment policies and risk management.

The meeting aims to reach an understanding on the Generally Accepted Principles and Practices (GAPP) on SWFs in advance of the IMF-World Bank Annual Meetings on October 10-13. The GAPP is expected to be presented to a meeting of the IMF's policy-guiding body, the International Monetary and Financial Committee (IMFC), on October 11 when it convenes during the Annual Meetings in Washington.

During the April 2008 Meetings of the IMF and the World Bank, the IMFC had welcomed "the IMF's initiative to work, as facilitator and coordinator, with SWFs to develop a set of best practices by the 2008 Annual Meetings." The IMFC emphasized that SWF best practices should be developed on a collaborative and voluntary basis, and go hand in hand with work in the Organization for Economic Cooperation and Development (OECD) and elsewhere on best practices for countries receiving SWF investments.

Earlier working group meetings

In developing the GAPP, the IWG earlier met in Washington on April 30-May 1, 2008, and in Singapore on July 9-10, 2008. The IWG's drafting group also met separately in Oslo in June 2008 (for more information, visit the IWG website).

The IWG sessions were cochaired by Hamad al Suwaidi, Undersecretary of the Abu Dhabi Department of Finance and a Director of the Abu Dhabi Investment Authority, and Jaime Caruana, Counsellor and Director of the IMF's Monetary and Capital Markets Department.

The members of the IWG are Australia, Azerbaijan, Bahrain, Botswana, Canada, Chile, China, Equatorial Guinea, Iran, Ireland, South Korea, Kuwait, Libya, Mexico, New Zealand, Norway, Qatar, Russia, Singapore, Timor-Leste, Trinidad & Tobago, the United Arab Emirates, and the United States. Oman, Saudi Arabia, Vietnam, the OECD, and the World Bank participate as permanent observers. The IMF helped to facilitate and coordinate the work of the IWG by providing a secretariat for the working group.

The IWG also benefited from the inputs from several recipient countries—including Australia, Brazil, France, Germany, India, Italy, Japan, South Africa, the United Kingdom, and the United States—as well as from the European Commission, the OECD, and the World Bank.

Growth of sovereign wealth funds

Sovereign wealth funds, some of which have been around at least since the 1950s, have become increasingly important players in the international monetary and financial system. Recently the rapid accumulation of foreign assets in some countries has resulted in an increase in the size, and in a growing number, of SWFs.

As a result, the total assets of SWFs worldwide have grown dramatically over the past 10-15 years, and various market estimates suggest that their assets may rise further from $2-3 trillion today to about $6-10 trillion within five years. At present, China, Kuwait, Norway, Russia, Singapore, and the United Arab Emirates are among the countries with the world's largest SWFs.

Comments on this article should be sent to imfsurvey@imf.org


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