## IMF Survey: Wealth Funds Group Publishes 24-Point Voluntary Principles

_IMF News, October 15, 2008_

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**Canonical URL:** [IMF Survey: Wealth Funds Group Publishes 24-Point Voluntary Principles](https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew101508b)

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## Bibliographic details
- Authors: Simon Willson IMF Survey
- Published: October 15, 2008

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### Santiago Principles and purpose
- The International Working Group of Sovereign Wealth Funds (IWG) published a set of 24 voluntary principles (the Santiago Principles) designed to ensure an open international investment environment.
- Purpose of the Santiago Principles (IWG statement):
  - Establish a transparent and sound governance structure that provides for adequate operational controls, risk management and accountability
  - Ensure compliance with applicable regulatory and disclosure requirements in the countries in which SWFs invest
  - Ensure SWFs invest on the basis of economic and financial risk and return-related considerations
  - Help maintain a stable global financial system and free flow of capital and investment
- The Santiago Principles specifically commit wealth funds to make a series of public disclosures while aiming to avoid placing SWFs at a competitive disadvantage in the marketplace.

### Definition, origins, and growth of SWFs
- SWFs are defined as special purpose investment funds or arrangements, owned by the general government, created by the general government for macroeconomic purposes; they hold, manage, or administer assets to achieve financial objectives and employ investment strategies including investing in foreign financial assets.
- Common sources for SWFs: balance of payments surpluses, official foreign currency operations, proceeds of privatizations, fiscal surpluses, and/or receipts from commodity exports.
- Historical and projected asset size:
  - SWFs have operated at least since the 1950s.
  - Market estimates suggest assets may rise further from $2-3 trillion today to about $6-10 trillion within five years.
- Countries with the world's largest SWFs at present include China, Kuwait, Norway, Russia, Singapore, and the United Arab Emirates.
- SWFs also exist in several middle-income countries, including Botswana and Trinidad and Tobago.

### IWG composition, governance, and next steps
- IWG membership (member countries):
  - 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 and Tobago, United Arab Emirates, United States
- IWG permanent observers:
  - Oman, Saudi Arabia, Vietnam, Organization for Economic Cooperation and Development, World Bank
- IWG co-chairs and facilitation:
  - Co-chaired by Hamad Al Suwaidi (Undersecretary of Abu Dhabi's Finance Department) and Jaime Caruana (Director of the IMF's Monetary and Capital Markets Department).
  - IMF staff facilitated and coordinated the work and provided technical support to the IWG.
- Work on a permanent international sovereign wealth funds body:
  - Consideration of a permanent body to represent SWFs would commence in early 2009.
  - Potential roles: help SWFs build capacity, work together, adapt the Santiago Principles as necessary, and conduct outreach to improve global understanding of SWFs.

### Policy messages, international reception, and context
- Free flow of capital and investment:
  - IWG co-Chair Hamad al Suwaidi: implementation of the Santiago Principles seeks to ensure the international investment environment will remain open.
  - The Principles include expectations that recipient countries will not subject SWFs to discriminatory measures to which other foreign or domestic investors in similar circumstances are not subjected.
- International endorsements and dialogue:
  - OECD Secretary General Angel Gurría: OECD provided inputs and observed the IWG work; OECD guidance to recipient countries combined with the Santiago Principles provides a robust framework to promote mutual trust and confidence.
  - Joaquin Almunia, European Commissioner for Economic and Monetary Affairs: Santiago Principles amount to a global public good needed in "these turbulent times" to enhance mutual trust and preserve an open investment environment.
- Role during global financial crisis:
  - Jaime Caruana: SWFs' long-term horizons can contribute to financial stability; the Santiago Principles are more important because of the global financial crisis.
  - David Murray (IWG drafting Chair): development and publication of the Santiago Principles was "all about trust"; convincing the world of commitment to openness was a core task.

*IMF Survey online — October 15, 2008*

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## Content in this bundle

- [022908pdf (PDF)](/-/media/websites/imf/imported/external/np/pp/eng/2008/_022908pdf.pdf){rel="external" type="application/pdf"}

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [In The News](https://www.imf.org/en/news/search)
- [Pact on voluntary principles](https://www.imf.org/external/pubs/ft/survey/so/2008/NEW090308B.htm)
- [IMF work on wealth funds](https://www.imf.org/external/pubs/ft/survey/so/2008/POL03408A.htm)
- [IMF Board on wealth funds](https://www.imf.org/external/pubs/ft/survey/so/2008/NEW032108A.htm)
- [Norway's model wealth fund](https://www.imf.org/external/pubs/ft/survey/so/2008/POL070908A.htm)
- [Rise of sovereign funds](https://www.imf.org/external/pubs/ft/fandd/2007/09/straight.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew101508b_