IMF mulling guidelines for sovereign wealth funds


Washington : International Monetary Fund (IMF) Thursday formed a group to examine the practices of sovereign wealth funds, which have taken up increasing stakes in financial institutions and corporations around the world.

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The new committee of government and business representatives will report in October at the twice-annual meetings of the IMF and World Bank with a set of global guidelines for the state-controlled funds to operate under.

Some countries including the United States have raised concerns about the increasing clout of sovereign wealth funds and state-owned companies around the world.

Some state operators have met resistance trying to buy stakes in corporations viewed as important to national security in other countries, but sovereign wealth funds have also been credited with providing investment banks with much-needed cash infusions during the current financial crisis.

Port operator Dubai World, owned by the United Arab Emirates government, acquired six US port terminals through a merger in 2006 but was forced to sell them again after experiencing a public backlash.

The IMF’s new International Working Group – set up after a two-day meeting in Washington between government and sovereign wealth fund representatives – said in a statement that it hoped to establish a set of “principles that properly reflects their investment practices and objectives.”

A sovereign wealth fund is a state-owned fund composed of assets such as stocks, bonds, property or other financial instruments.