Sovereign Wealth Funds in Resource Economies : Institutional and Fiscal Foundations

Sovereign wealth funds (SWFs) have reached a transitional moment. Created as a way to direct excess wealth toward economic development and long-term financial returns, some countries are now seeing a decline in revenue from sources such as oil. Many SWFs are now facing a new challenge—how to spend sustainably without depleting the funds. Sovereign Wealth Funds in Resource Economies explains the fiscal rules and institutional structures that can make SWFs thrive, providing a practical and theoretical guide to their optimal use in resource-revenue management.

Khalid Alsweilem and Malan Rietveld put forward an institutional perspective of SWFs as quasi-independent political and economic entities charged with managing national resource wealth, examining both investment and disbursement strategies. They advance a systematic, rule-based approach, suggesting when to accumulate and when to begin countercyclical spending based on concrete case studies. More than a mere financial portfolio, SWFs must be embedded in a credible fiscal and institutional framework if they are to contribute to improved economic performance. Alsweilem and Rietveld consider the variety of relationships that exist between SWFs and their governments, exploring the legal and policy side of the institutional approach. Their rule-based description of SWFs, since it allows tailoring and adjustment and invokes rules of thumb and best practices, is intended to be widely applicable across the diverse spectrum of global SWFs. Bringing together the practitioner perspective and scholarly expertise, this single-authored book will be invaluable for global policy makers and scholars working with sovereign wealth funds.

Khalid Alsweilem is a nonresident fellow at the Belfer Center for Science and International Affairs at the Harvard Kennedy School. He is also global sovereign wealth funds advisor for PwC and the former chief counselor and head of investment at the Saudi Arabian Monetary Agency.

Malan Rietveld is a fellow at the Columbia Center on Sustainable Investment at Columbia University and was previously a fellow at the Center for International Development at the Harvard Kennedy School. He is the editor of several books on sovereign wealth funds, including The New Frontiers of Sovereign Investment (Columbia, 2017, with Perrine Toledano). He has advised several sovereign wealth funds on governance, management, and strategic issues.