Countries coping with the coronavirus crisis and a slump in commodities prices are dipping into sovereign wealth funds for more than $100 billion, and that figure could swell as budget pressures mount for some emerging markets.
Governments from Angola to East Timor have built up “rainy day” savings to help stabilise their economies and support their citizens in the event of a shock. Some funds -- especially derived from commodities wealth -- are worth multiples of national economic output.
The twin blow of the commodities collapse and the pandemic, which stalled much economic activity for months, is likely to drain stabilisation funds in countries like Peru and Colombia, according to Global SWF, which tracks such funds.
Big chunks of similar funds in Ghana and Nigeria are likely to be spent, it said, while 24 withdrawals totalling about $137 billion include heavy drawdowns of savings or development funds in Bahrain, Kuwait, Iran and Angola.
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