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OECD Development Policy Papers

The OECD Strategy on Development aims to strengthen the Organisation’s contributions to inclusive and sustainable growth in a wide array of countries. It draws on OECD’s evidence-based approaches, policy dialogue and knowledge sharing to improve policy making and economic reform. This strategy identifies four interlinked thematic areas: innovative and sustainable sources of growth; mobilisation of resources for development; governance for sustainable development; and measuring progress for development. Designed for a wide readership, the OECD Development Policy Papers are intended to stimulate discussion and analysis on these topics.

English, French

The fiscal implications of strategic investment funds

Strategic investment funds (SIFs) are instruments of economic and financial policy, and the operations of these funds have important fiscal implications. These implications span the full cycle of the SIFs’ operations, from funding, through capital allocation, to operations and maintenance of the invested assets. SIFs with a capacity to deploy capital efficiently have the potential to increase the effectiveness of the public expenditure programmes in the SIFs’ respective home countries. However, the establishment and operations of SIFs also carry important fiscal risks, which need to be recognised and addressed. This paper considers the flows of capital into and out of SIFs, as well as the relationship of these flows to the fiscal framework and macro-fiscal context of the SIFs’ home countries. It also looks at the fiscal liabilities that can result from SIFs’ activities, and from their possible insolvency and bankruptcy, offering suggestions for how these risks can be mitigated.

English

Keywords: fiscal risk, strategic investment funds, fiscal liabilities, sovereign debt, fiscal management, sovereign wealth funds, public financial management, national development funds
JEL: H30: Public Economics / Fiscal Policies and Behavior of Economic Agents / Fiscal Policies and Behavior of Economic Agents: General; O23: Economic Development, Innovation, Technological Change, and Growth / Development Planning and Policy / Fiscal and Monetary Policy in Development; G23: Financial Economics / Financial Institutions and Services / Non-bank Financial Institutions; Financial Instruments; Institutional Investors; H81: Public Economics / Miscellaneous Issues / Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts; G28: Financial Economics / Financial Institutions and Services / Financial Institutions and Services: Government Policy and Regulation
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