RODNEY BAY, St Lucia – Following through the 2024/2025 budget address delivered in April 2024 on the introduction of a Sovereign Wealth Fund, (SWF) – “to create a multigenerational plan that would safeguard future generations” prime minister and minister for finance, Philip J. Pierre, via the office of the prime minister, February 3, 2025, advised that “the cabinet has approved the creation of the Sovereign Wealth Fund of Saint Lucia, a forward-thinking public investment fund designed not only to secure sustainable economic development but also to bolster our climate resilience.”
January 24, 2025, Prime Minister Pierre also announced that the cabinet of ministers are finalising plans to establish Saint Lucia’s first-ever SWF.
“The country, the government is going to pass it within this legislative year,” Prime Minister Pierre emphasised. “If not, very early next year, in April or May 2026.”
Expanding on the SWF as finance minister: “ The SWF means that the country is going to use the resources to save for [the] future generations. To create a basis for the country having some reserves in terms of investments that can be used for the future. […] We want to have a legacy of savings. This government wants to create a legacy of wealth creation in this country.” […]
Beyond the prime minister and minister for finance announcements and explanations, he did not elaborate on details to promote fiscal sustainability. And, towards the economic policy of the SWF development plan, economic and strategic leadership is yet to be defined, “to secure sustainable economic development” and to establish economic security for future generations “ to bolster our climate resilience.”
In due course, it will be fundamental that such plans and recommendations for funding mechanisms, investment strategies, fund structure, a governance model, legal considerations and management structure will surface.
Budget address 2024/2025: “ We are pursuing this initiative and have employed experienced advisors to assist. A memo is to be considered by the cabinet to approve the way forward. I will update members on the progress of this initiative.”
Currently, it is unclear where the money would come from to initially capitalise the SWF. Will it be return on investments, land leasing fees, Citizenship by Investment (CIP), budget surpluses, and other sources?
Matters of asset allocation and the true health of the Government of Saint Lucia (GOSL) balance sheet will certainly be put to the test — including budget surpluses, trade/export industries, minerals, national reserves, the composition of the Fund and its distance from the purview of politics, and will it be investments in the national interests — including technology, energy, health, education, food security and supply chain?
Creating a SWF is vital to invest public resources – a state-owned pool of money, and resources, productively from cronyism.
Saint Lucia does not have unlimited wealth as projected in annual budgets. The GOSL is a poor steward of the revenue and expenditure that it already controls.
Investors will have to think hard and fast on government debt that is generally too high. GOSL paper, regulations and ease of doing business. Conflicts of interest between businesses, politics and policymakers, data accessibility and having the best people to govern the SWF.
The concern is such that the government should control less — not more — meddling in international markets, investments in foreign financial assets, private sector investments and investment strategies that are more complicated and focus-driven and invested in various financial assets globally.
Reflecting concerns are embedded in the GOSL key characteristics of the SWF as published: A state-owned investment fund.
“The sovereign wealth fund’s objective shall be to support investments in climate adaptation and mitigation in addition to sustainable economic development.
That the sovereign wealth fund be a public fund managed by a board, which shall be a corporate body.
That the board shall devise investment guidelines that bind the performance of the investment manager, and that these guidelines should prioritize the following principles:
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- That a ‘high’ return target be the primary motivator prior to the attainment of set thresholds.
- That thresholds to trigger non-investment withdrawals be defined, with these triggers being tied to portfolio size relative to GDP.
- That the fund be invested according to the Environmental, Social, and Governance (ESG) principles;
- That derivatives and similar instruments be used only for hedging purposes.
“f. That the resources of the fund shall consist of such funds as may be allocated by the minister to the fund on its commencement.”
The GOSL directed that establishing the SWF, “ this vehicle for national development, it’s crucial to recognize the transformative power of savings” and “sets an example for Saint Lucians to develop a habit of saving and investing in the future.”
SWF invest in real and financial assets. The transactions and investment structuring are speciality functions, largely supposed to invest for the collective good of a nation’s future. The benefit of the country’s economy and citizens.
The long-term financial health of the GOSL and financial leadership of the SWF will require strategic leadership, and financial market modelling with a global perspective.
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