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The Sovereign Wealth Fund Act 2016
An act to provide for the establishment and managementt of a sovereign wealth fund and for matters incidental thereto.
The legislation is available on the Bahamas' online legislation database. Here is the link:
https://eh.gov.bs/wp-content/uploads/2016/10/Sovereign-Wealth-Fund-Act-2016.pdf
An act to provide for the establishment and managementt of a sovereign wealth fund and for matters incidental thereto.
The legislation is available on the Bahamas' online legislation database. Here is the link:
https://eh.gov.bs/wp-content/uploads/2016/10/Sovereign-Wealth-Fund-Act-2016.pdf
I'm going to make some legal-speakish references first to explain what a Sovereign Wealth Fund is, and what it is for, according to the legislation then I'll tone it down and it'll be smooth sailing.
What is a sovereign wealth fund ("SWF")?
@Investopedia has my preferred definition; a state owned investment fund used to the benefit of the country and it's citizens.
Oversimplification: the citizens become the Government's trust fund babies.
@Investopedia has my preferred definition; a state owned investment fund used to the benefit of the country and it's citizens.
Oversimplification: the citizens become the Government's trust fund babies.
What is the SWF for?
Section 4 (1) (a) - (d); summarized in laymans terms: the swf is suppose to save, and invest money that is derived from certain sources to "provide a heritage for future generations of the citizens of The Bahamas"
Section 4 (1) (a) - (d); summarized in laymans terms: the swf is suppose to save, and invest money that is derived from certain sources to "provide a heritage for future generations of the citizens of The Bahamas"
It is also intended to support and increase savings for future generations, make the country money, and then there is this one obscure section that I am sure @JoeyGaskinsJr may find interesting.
Section 4 (1) (d) says the purpose of the fund is -
"to support and promote any other strategic development objectives of The Bahamas."
I don't at this point know what these objectives are, or whether this provision is linked to something specific.
"to support and promote any other strategic development objectives of The Bahamas."
I don't at this point know what these objectives are, or whether this provision is linked to something specific.
That's what it is and what it is for in legislative terms (more or less). I think it is important that I share some general information about SWF's for depth of understanding.
So, a Government creates an SWF to invest in assets, overseas markets or other investments.
So, a Government creates an SWF to invest in assets, overseas markets or other investments.
The idea being that the Country will collectively benefit from making profitable investments. It's another way for a country to accrue profits to the benefit of nations economy and citizenry. Most importantly, they are a means of economic stabilization.
At the heart of an SWF is diversification, you want a broad portfolio of assets with different ris and volatility variables. Provided a great cushion through times of emergency, I'm sure.
Usually though, you'd need a budget surplus to establish the fund. I'm not quite sure about the mechanics here, but based on Abu-Dhabi, Singapore and Norway I think that to be correct. They are probably the 3 most well known SWF nations.
The Abu-Dhabi Invest Authority (an SWF) manages something like $875 Billion dollars. Obviously Abu-Dhabi has a trade surplus since they are an oil rich nation.
The Singapore Government Investment Corporation is another big SWF. They manage something like $440 billion in assets, and own another fund worth about SGD$310 Billion (USD$226 Billion is)
The one that really blew my mind though was Norway. I have a lot of Norwegian friends, and they definitely enjoy a better quality of life than most people.
Their Government Pension Fund has US $1 Trillion in assets, and purportedly owns 1.4% of the *global* stocks and shares.
Their Government Pension Fund has US $1 Trillion in assets, and purportedly owns 1.4% of the *global* stocks and shares.
You'll have noticed that the common denominator is that these nations all have industries that generate robust government revenue; manufacturing, biosciences etc in Singapore, and oil in Abu-Dhabi and Norway, as well as Norway's investments in the international capital markets.
They all have broad investment portfolios with little to no strict reliance on any one industry. This made me think: Why does The Bahamas have this, we don't have any of these things....or do we??
Section 4 (1) (a) says [The purpose of the Fund is -]
"to save and invest surplus funds derived from oil, gas, minerals and other natural resources"
The first three are straight forward. "other natural resources" peaked my interest.
"to save and invest surplus funds derived from oil, gas, minerals and other natural resources"
The first three are straight forward. "other natural resources" peaked my interest.
What do you think the other natural resources may be? I haven't really given it any depth of though if I'm keeping it 100 with you. I remain curious, but could this be from fisheries exports, agricultural exports or some other contemplated sector?
Let's say for the sake of explanation that they find oil in The Bahamas. Any surplus from a booming oil industry should be paid into the fund, and the fund invests it and the returns are used for the benefits of the country, and for us.
Some nations do things like maintain infrastructure and pay for hospitals, schools etc with the fund to keep costs low and quality high. Norway's SWF is a pension so each citizen gets a cheque periodically. Knowing our Governments we will be towing lines outside of the treasury.
That's about as much as I can condense it. If you want to ask anything specific about it, RT or DM me if you wish to keep it private.
Useful piece of legislation if we ever manage a surplus. lol
Useful piece of legislation if we ever manage a surplus. lol
