Sovereign Asset-Liability Management - Guidance for Resource-Rich Economies

Policy Papers, June 11, 2014

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Ample natural resource revenues create both opportunities and challenges for a sovereign to transform its natural resources into well-managed financial assets.
Inter-temporal smoothing of revenue and consumption/investment moves to the center stage of macroeconomic policies.
The questions arising from natural resource wealth accumulation are becoming more pressing for many countries, given the need to achieve intergenerational equity in a context where commodity prices may not continue their upward trajectory of the past decade.
Addressing these questions requires a flexible sovereign asset-liability management (SALM) framework that integrates various macroeconomic and financial trade-offs with the aim of containing financial risk to the sovereign balance sheet.
The framework and policy advice aims to guide policymakers across different institutions in weighing those trade-offs.

Natural resource revenue management should prioritize inter-temporal smoothing of revenues and consumption/investment.
Commodity price uncertainty and potential downward adjustments heighten the importance of SALM.
A SALM framework must explicitly integrate macroeconomic and financial trade-offs to contain financial risk to the sovereign balance sheet.
Institutional coordination across different policymaking bodies is necessary to weigh trade-offs appropriately.

Develop a flexible SALM framework tailored to resource-rich economies that:
- Integrates macroeconomic objectives with financial risk management.
- Balances intergenerational equity considerations against present consumption and investment needs.
- Guides policymakers across institutions to coordinate decisions affecting sovereign assets and liabilities.
Emphasize mechanisms to manage commodity price volatility and its impact on fiscal and financial stability.

Sovereign Asset-Liability Management - Guidance for Resource-Rich Economies, (USA: International Monetary Fund, 0) accessed 9/18/2026