Sovereign Wealth Funds: Investment of Surplus and Future Source of Public Revenue

Sovereign wealth funds (SWFs) are generally defined as state?owned investment funds, financed by the accumulation of current-account surpluses, either from raw materials exports (SWFs in the Middle East, Norway, and Russia), from structural surpluses of state savings (Singapore), or from the transfer of some of the Central Bank’s foreign exchange reserves (China). The objective of this is to make budget and commercial surpluses productive: money can be invested in stocks, bonds (private or treasury bills), real estate, art, or raw materials. From a legal perspective, SWFs can be considered public funds because of the way they function and are organized. Empirical analysis would classify them as public resources because SWFs both manage and generate such resources.