The Government of Saint Lucia has officially approved the creation of a Sovereign Wealth Fund aimed at securing long-term economic stability and strengthening the country’s ability to handle climate change.
A sovereign wealth fund is a state-owned investment fund comprised of money generated by the government, often derived from a country’s surplus reserves. It is designed to be a nest egg, allowing current money to be deployed in a way that benefits future generations.
According to a statement from the Office of the Prime Minister on Monday, Saint Lucia’s Sovereign Wealth Fund will support investments in climate adaptation and mitigation, as well as sustainable economic growth.
A board will manage the fund, making strategic investment decisions that align with the country’s development goals. The fund will follow strict investment guidelines, prioritising the following principles: 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 and tied to portfolio size relative to GDP; that the fund adhere to the Environmental, Social, and Governance (ESG) principles; and that derivatives and similar instruments be used for hedging purposes only.
“As the Government of Saint Lucia establishes this vehicle for national development, it’s crucial to recognide the transformative power of savings,” the OPM statement said.
“The Sovereign Wealth Fund of Saint Lucia sets an example for Saint Lucians to develop a habit of saving and investing in the future.”