A Year of “Living Dangerously”: The COVID Pandemic and Sovereign Wealth Fund Direct Investments in 2019-2020
As stores of surplus capital, a primary raison d’etre of many SWFs is to serve as fiscal buffers to provide fiscal support to owner governments. During the COVID pandemic, as lockdowns deepened, economic activity ground to a stop, impeding revenue generation, while dramatically increasing the demands on fiscal resources both directly and indirectly. In many cases,
sovereign funds were called on to offset burgeoning budget gaps and to stabilize rapidly depleting fiscal
resources even as budgets were cut and affected governments scrambled to find other available funding – including credit – to backstop the economic and financial impacts of the crisis. Reported drawdowns were widespread, ranging from large funds such as
in Qatar, Russia, Singapore, and even Norway, where nearly 5% of the Government Pension Fund Global’s capital was earmarked for fiscal support, to small funds – as in Ghana, Nigeria, or Botswana – that are far less well-resourced.
Beyond direct fiscal support to owner governments, SWFs engaged in a variety of other supplemental measures, designed to provide relief to distressed sectors of local economies. Mubadala Investment Company (United Arab Emirates), for example, rolled
out a $114 million rent relief plan in the retail, residential, office, and hospitality sectors. In Russia, the Russian Direct Investment Fund (RDIF) has been actively engaged in various phases of its government’s vaccine development efforts, including
investing in vaccine production. Besides, when and where appropriate, funds – from Singapore or Malaysia to Turkey have stepped in to fund or recapitalize local firms operating in key state sectors.
As stores of surplus capital, a primary raison d’etre of many SWFs is to serve as fiscal buffers to provide fiscal support to owner governments. During the COVID pandemic, as lockdowns deepened, economic activity ground to a stop, impeding revenue generation, while dramatically increasing the demands on fiscal resources both directly and indirectly. In many cases,
sovereign funds were called on to offset burgeoning budget gaps and to stabilize rapidly depleting fiscal
resources even as budgets were cut and affected governments scrambled to find other available funding – including credit – to backstop the economic and financial impacts of the crisis. Reported drawdowns were widespread, ranging from large funds such as
in Qatar, Russia, Singapore, and even Norway, where nearly 5% of the Government Pension Fund Global’s capital was earmarked for fiscal support, to small funds – as in Ghana, Nigeria, or Botswana – that are far less well-resourced.
Beyond direct fiscal support to owner governments, SWFs engaged in a variety of other supplemental measures, designed to provide relief to distressed sectors of local economies. Mubadala Investment Company (United Arab Emirates), for example, rolled
out a $114 million rent relief plan in the retail, residential, office, and hospitality sectors. In Russia, the Russian Direct Investment Fund (RDIF) has been actively engaged in various phases of its government’s vaccine development efforts, including
investing in vaccine production. Besides, when and where appropriate, funds – from Singapore or Malaysia to Turkey have stepped in to fund or recapitalize local firms operating in key state sectors.