By Staff Reporter
ISLAMABAD: Pakistan’s Senate passed a bill on Wednesday to establish a state-owned sovereign wealth fund that aims to stabilize the country’s economy through diversification and to generate wealth for future generations.
The Pakistan Sovereign Wealth Fund Bill, 2023, was moved by Finance Minister Ishaq Dar and received clause-by-clause approval from the House. The bill states that the objectives of the Fund are to diversify and broaden Pakistan’s economy, attract investment from other investors for developmental projects in the country, create investment models that promote economic growth and infrastructure development in Pakistan, and increase savings for future generations.
The Fund will be owned and controlled by the federal government, with its head office in Islamabad and the possibility of opening offices in Pakistan and abroad. The Fund will have perpetual succession and a common seal and may sue and be sued in its own name, have an independent legal personality, and enjoy financial and administrative independence.
The Fund’s resources will consist of various sources, including the capital provided by the federal government, the transfer of existing assets of the federal government such as real estate and state-owned enterprises, borrowings from established and reputable financial institutions, and the profits and proceeds of the investments of the Fund.
The bill also addresses all matters pertaining to the establishment, operations, and management of the Fund. The general superintendence, direction, management of the affairs and business of the Fund, and overall policymaking in respect of its operations will vest in the Board, which will be constituted with the approval of the Supervisory Council. The Supervisory Council will consist of senior officials from various ministries and departments of the federal government.
The Board will also be responsible for forming three independent committees for investment, audit, and risk management. The Board will submit periodic reports for the review and consideration of the Supervisory Council. The bill provides adequate measures for the preservation of the secrecy of the Fund and the misuse of confidential information. The accounts of the Fund will be audited by at least one auditor of international repute.
The bill further stated that the authorised capital of the Fund shall be Rs100 trillion ($600 billion) and its issued capital shall be paid in cash or in kind by the federal government. The issued capital of the Fund may be increased in the manner as provided in the regulations. The authorised capital of the Fund may be increased by a resolution of the Supervisory Council.
The resolution to increase the authorised or the issued capital shall be published by the Board in the official Gazette and on the website of the Fund within 15 days from the date of issue.
Internationally, sovereign wealth funds are state-owned investment vehicles that manage a portion of a country’s assets or revenues for various purposes, such as stabilizing fiscal balances, enhancing returns, or saving for future generations. According to [the Sovereign Wealth Fund Institute], there are currently 94 sovereign wealth funds worldwide, with a total asset value of $9.4 trillion as of March 2023. Some of the largest sovereign wealth funds include Norway’s [Government Pension Fund Global], China’s [China Investment Corporation], and Abu Dhabi’s [Abu Dhabi Investment Authority].
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