All the talk about Sovereign Wealth Funds has caused me to question who will benefit from the investment returns and principal. If you are a politician or money manager you will be salivating.
According to the Sovereign Wealth Fund Institute, it took Trinidad 17 years to amass $5.5 billion compared to Mexico’s $6.6 billion for the same period. The number one and two ranked funds belong to Norway and China, respectively. Norway took 27 years to reach $870.8 billion while it took China only 10 years to achieve $813.8 billion. It should be noted China has several other similar sovereign funds totalling approximately $900 billion.
Then there is the Sovereign Wealth Fund established by Venezuela in 1998 under the advice of the IMF. By December 2001, the fund had $7.1 billion in assets. In 2003, the government tapped the fund to cover a budget deficit, withdrawing more than $6 billion. In 2016, the fund balance is $800 million.
In 2016, Trinidad drew from its sovereign fund to plug budget shortfalls. The Finance Minister was quoted in Bloomberg as saying during a session of Parliament, “The purpose of this fund is to offset serious shortfalls in revenue in periods of depress-ed petroleum prices,” Imbert said during a session of Parliament; “It is not, as some believe, a trophy to be kept on a shelf and never to be touched.”