By Rangarirai Gumbo
THE country’s sovereign wealth fund is now operational and will cater for future generations.
A sovereign wealth fund is a State-owned investment fund composed of money generated by the government, often derived from a country’s surplus reserves.
It provides a benefit for a country’s economy and its citizens.
The funding for a SWF can come from a variety of sources. Popular sources are surplus reserves from State-owned natural resource revenues, trade surpluses, bank reserves that may accumulate from budgeting excesses, foreign currency operations, money from privatisation, and governmental transfer payments.
Addressing an NDS1 dissemination workshop in Wedza recently, Deputy Minister of Finance and Economic Development Clemence Chiduwa said the SWF would be used by future generations.
“We have created a SWF that will benefit future generations. Those generations must benefit from our resources such as granite and other minerals. We want them to benefit from these resources and be able to say ‘we have also benefited from the country’s resources’.”
Reserve Bank of Zimbabwe principal economist Mr Clever Torima said the SWF could also assist the country in emergency situations.
“In future, the SWF can be used to support emergency situations like when the Covid-19 struck or cushion citizens from global upheavals such as those brought about by the war in Ukraine.”
Under the country’s laws, the ownership of the Fund is vested in the Republic of Zimbabwe with the President acting as the trustee.
The objectives of the Fund include making secure investments for the benefit and enjoyment of future generations of Zimbabweans; and to support the development objectives of the government, including its long-term economic and social development.
The wealth fund also supports fiscal or macroeconomic stabilisation, in particular to supplement revenues when these are prejudiced by the fluctuation of prices payable for those minerals on which royalties and other taxes are collected for the benefit of the Consolidated Revenue Fund.
The Fund also contributes to national revenues from the net returns on its investments in accordance with the law.