Tuvalu Trust Fund - AbsoluteAstronomy.com

The Tuvalu Trust Fund is an international sovereign wealth fund

Sovereign wealth fund

A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...

developed by Tuvalu

Tuvalu

Tuvalu , formerly known as the Ellice Islands, is a Polynesian island nation located in the Pacific Ocean, midway between Hawaii and Australia. Its nearest neighbours are Kiribati, Nauru, Samoa and Fiji. It comprises four reef islands and five true atolls...

, a small, central Pacific island nation, as a supplement to cover shortfalls in the national budget.

Establishment

In 1987, the Trust fund was established by international agreements between the government of Tuvalu and the international donors of Australia

Australia

Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

, New Zealand

New Zealand

New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

, and the United Kingdom

United Kingdom

The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

. The initial amount invested by the latter three nations amounted to A$

Australian dollar

The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...

27.1 million.

Development of the Fund

Through successful investment abroad, the initial assets of A$27.1 million grew to A$66 million in 2000. This amount was achieved with the help of other international donors of Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

and South Korea

South Korea

The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...

. The government of the Republic of Tuvalu has set an "informal target" of A$100 million before it will stop reinvesting in the fund.

Structure

In order to avoid mismanagement and corruption that has plagued many other Pacific trust funds, the government established a management structure that includes:

Board of Directors, with each appointed by an original donor
Professional fund management
International, external auditors
Advisory committee (each original donor has a member on the committee)

Domestic uses

The fund was established for the intended purpose of helping to supplement national deficits, underpin economic development, and help the nation achieve greater financial autonomy.

Key element

One important element of the fund in order to avoid overdrawing to fund unauthorised projects, is the "separation of fund capital from fund proceeds available for distribution."

External links