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Sovereign Wealth Funds and Long-Term Development Finance : Risks and OpportunitiesSovereign wealth funds represent a large
 and growing pool of savings. An increasing number of these
 funds are owned by natural resource exporting countries and
 have a variety of objectives, including intergenerational
 equity and macroeconomic stabilization. Traditionally, these
 funds have invested in external assets, especially
 securities traded in major markets. But the persistent
 infrastructure financing gap in developing countries has
 motivated some governments to encourage their sovereign
 wealth funds to invest domestically. This paper proposes
 some basic elements of a conceptual framework to create a
 system of checks and balances to help ensure that the
 sovereign wealth funds do not undermine macroeconomic
 management or become a vehicle for politically driven
 "investments." First, the risks and opportunities
 of domestic investment by sovereign wealth funds are
 analyzed. Central issues are the relationship of sovereign
 wealth fund financing to the budget process and to the
 procurement systems of sector ministries, as well as the
 establishment of appropriate benchmarks and safeguards to
 ensure the integrity of investment decisions. The paper
 argues that a well-governed sovereign wealth fund, with a
 sound mandate and professional management and staffing, can
 possibly improve the quality of the public investment
 program. But its mandate should not duplicate that of other
 government institutions with investment mandates, such as
 the budget, the national development bank, the investment
 authority, and state-owned enterprises. Establishing rules
 on the type of investment (for example, commercial and/or
 quasi-commercial) and its modalities (for example, no
 controlling stakes, leveraging private investment) is one
 way to ensure separation between the activities of the
 sovereign wealth fund and those of other institutions. The
 critical issue remains that of limiting the sovereign wealth
 fund's investment scope to that appropriate for a
 wealth fund. If investments that generate quasi-market
 returns are permitted, the size of the home bias should be
 clearly stipulated and these investments should be reported separately.
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The Power of Public Investment Management : Transforming Resources into Assets for GrowthThis publication consists of seven chapters: building a system for public investment management; a unified framework for public investment management; country experiences of public investment management; approaches to better project appraisal; public investment management under uncertainty; procurement and public investment management; and public investment management for public-private partnerships.
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Sovereign Wealth Funds in East AsiaThe massive size, rapid growth, and
 high-profile investments of Sovereign Wealth Funds (SWFs) in
 the U.S. and elsewhere in 2007 has attracted the attention
 of the media, politicians, regulators, and academics over
 the past year. Some of the SWF investments have been viewed
 as market stabilizing, for instance the substantial equity
 investments in large U.S. financial institutions that were
 recently in financial trouble after the sub-prime mortgage
 crisis. However, there is great suspicion from many
 political and academic quarters that SWFs are politically
 motivated with many SWFs in Asia now at the center of the
 storm. Although SWFs have been in existence for many decades
 worldwide, most SWFs in the East Asia and Pacific Region
 (EAP) are relatively new. The emergence of the SWFs in Asia
 is largely a by-product of the strong economic development
 at East Asian countries and the attendant accumulation of
 foreign exchange reserves, however, there are other types of
 SWFs in the region. The Governments have taken a concerted
 strategy to enhance the returns on these excess reserves.
 The EAP region is an ideal region to take a look at the
 issues surrounding SWFs since Asia has the full range of
 funds from long-established funds to brand new funds; from
 passive portfolio investors to more aggressive strategic
 investors; from resource-backed funds to foreign
 reserve-backed funds; and, based in the largest, most highly
 developed economies to the smallest, poorest economies in
 Asia. Therefore, the objective of this report is to document
 the status of Sovereign Wealth Funds in the East Asia Region
 and to understand the implications of their rapid growth.
 Many developing countries have recently shifted a higher
 proportion of their foreign currency earnings from official
 foreign currency reserves to sovereign wealth funds.
 Sovereign wealth funds have an estimated $600 billion in
 assets under management in developing countries, dominated
 by China ($200 billion held by the Chinese Investment
 Corporation and $68 billion held by the Central Huijin
 Investment Company) and Russia ($130 billion held in the
 Reserve Fund and $33 billion held by the Fund of Future
 Generations). It should be noted that this amount is small
 relative to the total level of reserves held by developing
 countries (estimated at $3.7 trillion at end 2007).