‘The purpose of a SWF is to offset serious revenue shortfalls’

Dear Editor,

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.”

 

Yours faithfully,

Keith Bernard

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