Making Sovereign Wealth Funds Resilient, Responsible, and Ready to meet the challenges of a changing world

IMF News, October 29, 2025

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Published: October 29, 2025

Context and opening

Keynote remarks by Yan Liu, General Counsel and Director of the Legal Department, at the 2025 International Forum of Sovereign Wealth Funds Annual Meeting.
Event date: October 29, 2025.
Speaker background: contributed to the development of the Santiago Principles in 2008; first in‑person participation at IFSWF Annual Meetings in 17 years.

Annual Meetings takeaways

Global growth: "held steady at about 3% according to the World Economic Outlook."
Inflation: "easing, though unevenly across countries."
Medium‑term growth: "at historic lows."
Public debt: "at historic highs—with global public debt expected to exceed 100% of GDP by 2029."
Structural shifts highlighted: trade, geopolitics, technology (including the rise of AI).
Consequences: greater unpredictability, fragmentation, and risk in the global economy; pressures on independence and credibility of domestic policy institutions.

Evolution of the sovereign wealth fund landscape

Growth in number, scale, and reach:
- Early 2000s: "about 40 major funds holding about $2-3 trillion in foreign assets."
- Today: "more than doubled—with over 100 funds managing a staggering $11-12 trillion depending on the estimates."
Mandates and objectives:
- Expanding beyond traditional stabilization and savings roles to support national priorities and industrial policy (economic diversification, climate resilience, infrastructure development).
Investment strategies:
- Shift from publicly traded foreign securities into private markets, direct investments, and co‑investment structures.
- Drivers: market stress, push for higher returns, tighter scrutiny of cross‑border investments, geopolitical fragmentation.
- Result: increased domestic investment activity with implications for fiscal frameworks and policy coherence.

Principles and insights to enhance resilience and effectiveness

Clear and internally coherent mandate:
- Importance: guides legal, policy, and investment decisions.
- Risk: multiple or non‑traditional objectives (e.g., sustainable development, climate resilience) can create trade‑offs and conflicting priorities.
Legal status and governance alignment:
- Stabilization funds: often accounts managed by central banks, investing in liquid, low‑risk foreign assets.
- Savings funds: often incorporated entities with institutional oversight and sophisticated asset management systems.
Transparency and accountability:
- Essential to maintain public trust and long‑term discipline.
- Principle: "the public has a right to understand how national wealth is being managed."

Three priority areas for laws, governance, and institutional design

Board capacity and legal safeguards:
- Need for boards able to exercise meaningful oversight.
- Law should stipulate rigorous eligibility criteria to ensure collective expertise.
- Specialized Board committees (e.g., audit) are essential.
Alignment with fiscal and corporate governance when investing domestically:
- Greater government involvement in identifying priority sectors increases political and governance risks.
- Mitigation: adhere to sound fiscal principles, corporate governance standards, and national policies on state ownership to ensure coherence with broader economic objectives.
Coordination with macroeconomic policy to manage domestic conversion risks:
- Large‑scale conversion of foreign exchange receipts into domestic assets can pressure monetary and exchange rate policy and heighten Dutch disease risk.
- Requirement: strong interagency coordination and mechanisms to ensure currency conversions do not undermine monetary policy.

How the IMF can support sovereign wealth funds

Santiago Principles legacy:
- Developed in 2008 with the IMF’s close collaboration; remain "a cornerstone of sound governance" due to clarity and pragmatism.
- Need to reflect evolving trends (geopolitics, technology, new investment strategies) and provide targeted operational guidance for implementation.
IMF standards, surveillance, and technical assistance:
- IMF has developed and endorsed standards and codes relevant to sovereign wealth funds, including guidelines on fiscal policy transparency, central bank transparency, foreign reserve management, and financial oversight.
- Ongoing comprehensive review of surveillance policy to sharpen annual health checks and offer targeted advice on fiscal frameworks, local currency bond markets, central bank independence, financial supervision, and fintech infrastructure.
AML/CFT and financial integrity:
- Robust AML/CFT frameworks support strong internal controls and governance practices, reducing exposure to financial crime.
- IMF strategy to help member countries strengthen AML/CFT systems.
Debt transparency and sovereign debt restructuring:
- Sovereign wealth funds increasingly active in sovereign finance and domestic debt markets as official development assistance declines.
- Debt transparency: important both for funds as creditors and for borrowers to maintain credibility and investor confidence.
- IMF work referenced: published a paper reviewing legislation in 85 borrowing and creditor countries on Legal Foundations of Public Debt Transparency; provides TA to strengthen public debt laws and disclosure practices.
- For countries with unsustainable debt: "swift and orderly debt restructurings" help preserve asset values and reduce uncertainty; IMF supports the Global Sovereign Debt Roundtable and evolving debt restructuring architecture.

Concluding recommendations and call to action

Build an enduring ecosystem anchored in:
- Clear mandates.
- Rigorous oversight.
- Robust transparency.
- Unwavering accountability.
- Strong legal frameworks.
Emphasis on decisive, collective action to reinforce resilience, integrity, and impact of sovereign wealth funds amid rapid transformation.
IMF stance: ready to deepen dialogue and strengthen collaboration with sovereign wealth funds.

Keynote Remarks by Yan Liu — Making Sovereign Wealth Funds Resilient, Responsible, and Ready to meet the challenges of a changing world; October 29, 2025 — https://www.imf.org/en/news/articles/2025/10/29/sp102925-yl-ifswf-speech