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Making Sovereign Wealth Funds Resilient, Responsible, and Ready to meet the challenges of a changing world
October 29, 2025
Good afternoon. It is a real pleasure to be here with all of you today.
Let me begin by thanking the IFSWF Secretariat for the kind invitation, and ADIA and Mubadala for graciously hosting us this week.
This is a timely and important conversation—one that resonates deeply with me, because at the IMF, we fully recognize the critical role that sovereign wealth funds play in shaping the global financial system.
On a personal note, I had the privilege of contributing to the development of the Santiago Principles in 2008. Seventeen years later, it’s deeply rewarding to join your Annual Meetings in person for the first time and to witness the remarkable progress this community has made.
Just two weeks ago, we concluded the IMF/World Bank Annual Meetings where finance ministers and central bank governors gathered to address urgent priorities in a world undergoing profound transformation. These discussions provide important context for today’s conversation.
I’d like to build on that context by exploring three key themes:
Let me start with the Annual Meetings Takeaways
The global economy has performed better than feared—but the outlook is worse than needed. So far, global growth held steady at about 3% according to the World Economic Outlook, but this was driven largely by temporary factors. Inflation is easing, though unevenly across countries. Meanwhile, medium-term growth prospects are at historic lows, and public debt is at historic highs—with global public debt expected to exceed 100% of GDP by 2029.
At the same time, deep structural shifts in trade, geopolitics, and technology—including the rise of AI—are reshaping the global landscape. Free trade and free flow of capital—once pillars of the global order—can no longer be taken for granted. Political pressures are testing the independence and credibility of domestic policy institutions. These challenges have made the global economy less predictable, more fragmented, and riskier.
One sentiment echoed through the Annual Meetings: the world order is changing. We must look forward, not back.
In today’s fast-changing environment, sovereign wealth funds are more vital than ever. They can boost domestic resilience, preserve national wealth, smooth volatility, and promote sustainable growth, fostering economic dynamism. Globally, they help allocate surplus revenues, enhance liquidity, and act as stabilizers in times of financial stress.
Yet with great influence comes great responsibility.
When managed well, sovereign wealth funds can be engines of intergenerational prosperity and financial stability. But, when mismanaged through poor governance and lack of transparency, or misused by corrupt actors, they risk becoming sources of instability. This erodes trust, weakens institutions, and undermines the integrity and stability of the domestic and global financial systems.
This is why the stakes are so high—and why this Forum is critical. It brings together sovereign wealth funds from around the world to exchange ideas, reinforce the values of transparency, good governance, and long-term stewardship, and make them resilient, responsible, and ready to meet the challenges of a changing world.
Let’s now turn to how the sovereign wealth fund landscape has evolved over time.
First, the growth in number, scale and reach of these funds is striking. Back when we first began to monitor them in the early 2000s, we estimated about 40 major funds holding about $2-3 trillion in foreign assets. Today, that number has more than doubled—with over 100 funds managing a staggering $11-12 trillion depending on the estimates.
Second, the mandates and objectives of sovereign wealth funds are evolving. Many are expanding beyond traditional stabilization and savings roles to support broader national priorities and industrial policy—from economic diversification to climate resilience and infrastructure development.
Third, investment strategies are becoming more diverse and complex. Funds are increasingly moving beyond publicly traded foreign securities into private markets, direct investments, and co-investment structures. Market stress and the push for higher returns have accelerated this trend. Tighter scrutiny of cross-border investments, increasing deployment of investments for industrial policy objectives, and geopolitical fragmentation are also driving funds to domestic markets. These shifts can have significant implications for fiscal frameworks and policy coherence.
In this context, what principles can help sovereign wealth funds enhance their resilience and effectiveness? Let me share a few insights from our work at the IMF:
First, a clear and internally coherent mandate is foundational as it guides every legal, policy and investment decision. When a fund pursues multiple objectives, trade-offs and conflicting priorities could undermine performance and governance. This risk is more pronounced when non traditional objectives, such as sustainable development, or climate resilience, are added to the mandate. In this varied context, clarity and coherence across objectives are critical to avoid conflicts and maintain operational focus.
Second, legal status and related governance structure must align with the fund’s mandate. For example, stabilization funds typically operate as accounts managed by central banks, investing in liquid, low-risk foreign assets. In contrast, savings funds—given their focus on higher-risk, less liquid investments—are often incorporated entities with more sophisticated institutional, oversight, and asset management systems.
Third, robust transparency and accountability are essential to maintaining public trust and long-term discipline. While disclosure levels and practices vary, the principle remains: the public has a right to understand how national wealth is being managed.
These principles must be embedded in laws, policies, and practices, regardless of the political environment in which sovereign wealth funds operate. Let me highlight three key areas.
First, as sovereign wealth funds navigate increasingly complex investment territory, their legal and governance frameworks need to keep pace. Engagement in these investments requires a board of directors with the capacity to exercise meaningful oversight. That is why law must stipulate rigorous eligibility criteria to ensure collective expertise. Setting up specialized committees within the Board—such as those focused on audit —is also essential. All of this becomes even more important, as funds face growing geopolitical pressures and increased public scrutiny.
Second, as sovereign wealth funds increasingly shift toward domestic investments, they must recognize that their growing role as domestic fiscal institutions requires alignment with sound fiscal and corporate governance standards. Domestic investment could bring greater government involvement in shaping investment policy—such as identifying priority sectors, strategic industries or companies for investment, which increases exposure to political and governance risks. To mitigate such risks, funds must adhere to sound fiscal principles, corporate governance standards, and national policies on state ownership, ensuring coherence between investment decisions and broader economic objectives.
Third, the inward shift of investments introduces complexity for economic policy coordination and institutional design. For funds originally funded by foreign exchange receipts, large scale conversion into domestic assets can put pressure on monetary and exchange rate policy, heightening the risk of Dutch disease—the very issue many funds were intended to address. So, strong interagency coordination is crucial to avoid policy conflicts, and robust mechanisms are needed to ensure that currency conversions do not undermine monetary policy.
Finally, how can the IMF help?
Back in 2008, the International Working Group of Sovereign Wealth Funds, in close collaboration with the IMF, developed the Santiago Principles. Seventeen years later, these principles remain a cornerstone of sound governance. Their enduring relevance lies in their clarity and pragmatism: they are not overly prescriptive, but rooted in timeless values—transparency, accountability, and responsible stewardship of public wealth.
This said, as the global landscape evolves—through geopolitical shifts, technological disruption, and new investment strategies—we need to reflect on how these trends affect the thinking behind these principles. Also, meaningful implementation of these principles requires sustained commitment, active engagement, and in some cases more targeted operational guidance.
That’s why forums like this are so essential. They provide catalysts for shared learning, honest dialogue, and collective progress.
At the IMF, we look at the Santiago Principles through the lens of our surveillance and TA work. Because these Principles are intentionally broad, our member countries often seek our guidance on how to implement them within their own domestic legal and regulatory frameworks.
Let me share a few key areas where the IMF and in particular the Legal Department can further support these efforts:
First, the IMF has developed and endorsed a set of standards and codes that are highly relevant to sovereign wealth funds. These include guidelines and best practices on fiscal policy transparency, central bank transparency,
foreign reserve management, and financial oversight, all essential for the sound management of sovereign wealth funds.
Second, we are undertaking a comprehensive review of our surveillance policy to sharpen our annual health check of our member countries’ economies. This will allow us to offer more targeted advice on, for instance, fiscal frameworks, local currency bond markets, central bank independence, financial supervision, and fintech infrastructure—all areas that intersect with sovereign wealth fund operations.
Third, robust AML/CFT frameworks are essential for supporting an environment where funds can implement strong internal controls and governance practices, effectively reducing exposure to financial crime. We have developed a comprehensive strategy to help our member countries strengthen their AML/CFT systems to safeguard financial integrity.
Fourth, as official development assistance declines, sovereign wealth funds are stepping up as key players in sovereign finance and debt markets - especially in deepening domestic capital markets.
Debt transparency is important for sovereign wealth funds. As creditors, they need clear, reliable information on a country’s debt profile to assess risk and make informed investment decisions. As borrowers, transparency is crucial for maintaining credibility and investor confidence. We view debt transparency as a public good, and to this end, published a landmark paper last year on Legal Foundations of Public Debt Transparency, reviewing legislation in 85 borrowing and creditor countries. We also provide TA to help countries strengthen public debt laws and disclosure practices.
For countries with unsustainable debt, swift and orderly debt restructurings help preserve asset values, reduce uncertainty, and minimize contagion risks—factors that are critical for those sovereign wealth funds seeking stable, long-term returns in emerging and frontier markets. We actively support the Global Sovereign Debt Roundtable and contribute to the evolving architecture for sovereign debt restructuring, including through ongoing policy reforms.
These are just a few examples of how we can help.
In conclusion, let us build an enduring ecosystem - anchored in clear mandates, rigorous oversight, robust transparency, and unwavering accountability, all grounded in strong legal frameworks.
Now is the time for decisive, collective action to reinforce the resilience, integrity, and impact of sovereign wealth funds in an era of rapid transformation.
At the IMF, we stand ready to deepen our dialogue and strengthen our collaboration, as you shape the future for sovereign wealth funds.
