Sovereign Wealth Funds: Stabilization, Investment Strategies and Lessons for The Arab Countries

FromSep 10, 2016 To Sep 11, 2016

Washington, USA

ERF has organized a workshop on Sovereign Wealth Funds (SWFs), in Washington, USA in collaboration with The World Bank, on September 10-11, 2016.
In view of their dependence on temporary and volatile commodity income, many oil-rich Arab countries realized the importance of sovereign stabilization and long-term investment institutions early on. The State of Kuwait is the world pioneer of sovereign wealth funds (SWFs), establishing two funds, as early as 1953 and many other GCC countries followed suit (the Emirate of Abu Dhabi of the United Arab Emirates, in 1976; Oman in 1980; Qatar in 2000; and Bahrain and Libya in 2006.) SWFs have been established for a variety of economic and political-economy objectives, including: (i) macroeconomic stabilization, (ii) precautionary savings or holding of international reserves to face future liquidity constraints (akin to central bank reserves); (iii) intergenerational sharing of current temporary resource wealth with future generations; (iv) saving for future government expenditure on physical and human capital, to ensure smoothing of intergenerational public spending and benefits and (v) international portfolio diversification.
In this context, ERF commissioned research to contribute to the growing but still nascent literature on SWFs by addressing three broad clusters of positive and normative issues facing SWFs: (i) SWF links to fiscal policies and structural features of their home countries, (ii) the portfolio composition of a SWF and (iii) the political economy of sovereign wealth funds.
The objective of this workshop was to provide a platform for discussing the draft papers and their preliminary findings among authors and policy experts in order to improve the final output.