But State Street Global Advisors reminded us during a chat
today that SWFs are nothing new. John Nugee, who manages the
investment house’s SWF business, noted that Kuwait established
the Kuwait Investment Board (now Authority) as far back as 1953,
eight years before the country’s independence.
For those who really like their investment history, Nugee
also offered up the tale of Kiribati’s Revenue Equalisation
Reserve Fund. This SFW is a trust, set up in 1956 when Kiribati
was still the Gilbert Islands and under British rule. It
gathered the earnings from the islands’ phosphate deposits to
protect against the time when — now — there were none left.
Such foresight means the islands which now survive on
exports of copra, fish and seaweed have some $525 million in the
pot to help fund their fiscal deficit. That may not sound much
but by some calculations it is 625,000 times larger than the
country’s annual GDP per capita.