## 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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## Bibliographic details
- Published: October 29, 2025

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### 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*

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## References

- [Yan Liu](https://www.imf.org/en/news/articles/2025/10/29/%E2%80%9Dhttps://www.imf.org/en/About/senior-officials/Bios/yan-liu%E2%80%9D)
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