Where did the Sovereign Wealth Fund project arrive?

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[size=52]Where did the Sovereign Wealth Fund project arrive?[/size]

[size=45]There have been calls from parliamentarians and economists regarding the establishment of a sovereign wealth fund that embraces the oil abundance and establishes a solid base for future generations in facing challenges, especially as the world is entering an era of oil depletion. Indeed, these calls were not new in the Iraqi space.[/size]
[size=45]And the advice provided by the experts, within their recommendations, to diversify the country's economy and strengthen its economic pillars, but it has been repeated now, by pushing the historical boom in oil prices, as Iraq represents one of the countries that achieved great gains from that. Also, Iraq's official completion of the Kuwaiti compensation payments last February, triggered these demands, as Baghdad was paying about two billion dollars annually, which means adding them to the state budget. Sovereign wealth funds are investment funds that manage the state’s financial surpluses through assets outside the borders of the countries of origin, but they are not affiliated with the ministries of finance or central banks, as they differ from the foreign monetary reserve. Although the idea of ​​establishing this fund dates back to several years, Prime Minister Mustafa Al-Kazemi announced last year the start of work on establishing the Generations Fund, as he confirmed in a statement during a cabinet session that “work is underway to activate the Future Generations Fund out of a sense of responsibility towards Our children and grandchildren.” He added, "We want to secure Iraq's future away from dependence on an unsustainable economy, as the oil wealth will not be dominant throughout its life, and many countries have begun to search for alternative and clean energies."[/size]
[size=45]rational move[/size]
[size=45]In this context, the expert in economic affairs, Salama Sumaisem, believes that “the establishment of the sovereign fund is a logical and rational step, to preserve the value of money from oil revenues, as well as to guarantee the rights of future generations, which enhances the situation of the Iraqi economy, and makes it more powerful in the face of any future crises. She added in a statement to (Al-Mada) that "if the government needs money, it can withdraw from the fund, and this is in the form of debts."[/size]
[size=45]Sumaisem pointed out that “the establishment of the fund, should not be linked to the rise in oil prices, as many countries of the world have established their funds, without the presence of that oil abundance,” pointing to the existence of “a legal impasse, related to the fact that the current government is to conduct business, but the idea must remain List". At the top of the global sovereign fund rankings is the Norwegian State Pension Fund, which manages $1.274 trillion in assets across 21 subsidiaries. Some Arab countries also own sovereign funds with assets of hundreds of billions of dollars, such as the sovereign fund of the Kuwait Investment Authority, as well as the Qatar Investment Fund, the sovereign wealth fund in Abu Dhabi, and another in Saudi Arabia.[/size]
[size=45]For his part, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed that "the establishment of the sovereign fund depends on determining the price of oil within the federal budget law, and the legislation of the budget law for the year 2022 depends on the date of forming the new government." He added in a press statement, followed by (Al-Mada), that "the provisions of Article 19 of the Financial Management Law in force in Iraq No. 6 of 2019 provided for covering the deficit and providing the surplus for use in the budgets of the following years, including the Sovereign Fund, according to the management and investment of official reserves." Iraq has a history of attempts to establish a sovereign fund, and has established some small funds; For example, the first initiative to establish such a fund appeared in 1953 with the establishment of the Iraqi Reconstruction Council, where a committee was formed to manage it after an agreement was reached between the Iraqi government and British oil companies.[/size]
[size=45]According to economic experts, the philosophy of the Sovereign Fund is based mainly on assigning its tasks to an independent body that works to attract economic competencies that have a vision and treatment that differs from the government's approach in managing development and investment operations.[/size]
[size=45]Who will sponsor the project?[/size]
[size=45]Despite the differentiation of the ranks of the political blocs at the present time, and the clarity of their alliances, with the presence of two camps, the first is the “Save the Homeland” alliance and the second is the “coordinating framework”, none of the two major alliances has announced, within its program for managing the next phase, the establishment of this fund, or the start of the first steps To put the features of this project, which is what puts these calls, to the test, in the absence of a political impetus, for the birth of this project.[/size]
[size=45]In the event that the political forces or the Iraqi government start in the line of the first draft of the law of this project, there are a number of sovereign wealth funds that are managed regionally and globally and that can be studied when it comes to the structure of the Iraq Fund.[/size]
[size=45]But by looking at these funds and their ultimate economic goals, experts confirm that the most important reasons for establishing these funds are to help avoid economic and financial crises that may arise from internal and external factors, and thus help protect the country's economy during times of recession.[/size]
[size=45]Another reason is to help rebuild damaged infrastructure or promote sustainable development through large-scale investments, which would have been difficult to finance without such funds.[/size]
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