Statement by Mr. Eric Parrado in representation of the Minister of Finance of Chile, Andres Velasco, on Sovereign Wealth Funds
Press Release No. 08/11
October 11, 2008
On behalf of the Chilean government, I would like to begin by expressing our gratitude to the members of the International Working Group (IWG) of Sovereign Wealth Funds (SWFs) for the committed work in these last months. We firmly believe that the agreement reached in Santiago by the IWG, known as the "Santiago Principles," an honor that we are very proud of, is a milestone in the process to foster trust and confidence in the international financial system regarding SWFs. In these challenging times, the principles are even more important. We would also like to express our appreciation and gratitude to Mr. Jaime Caruana, Counselor and Director of the International Monetary Fund’s Monetary and Capital Markets Department, and his team, for the support that led to the preparation of the "Santiago Principles." At the same time, we would also like to thank Mr. Hamad al Suwaidi, Undersecretary of the Abu Dhabi Department of Finance and Director of the Abu Dhabi Investment Authority, for his leadership in the discussions of the IWG, and David Murray, Chairman of the Australian Future Fund, for his significant role in facilitating consensus between the different SWFs.
The influence of SWFs on corporate governance practices, especially as a result of their growing number and size in the last years -and potential future grow- requires a framework of principles and practices to ensure that the arrangements of these entities are properly set up and that investments are made on an economic and financial basis. The "Santiago Principles" provide this needed framework and are underpinned by the following objectives: (i) maintaining a stable global financial system and the free flow of capital and investments; (ii) complying with all applicable regulatory and disclosure requirements in the countries in which they invest; (iii) investing on the basis of economic and financial risk and return-related considerations; and (iv) having a transparent and sound governance structure in place that provides for adequate operational controls, risk management, and accountability.
The "Santiago Principles" are the result of intensive deliberations by IWG members that recognize distinct levels of economic development and regulatory environments. We would like to highlight that the IWG provided an exceptional platform for representatives of recipient countries to discuss directly with the SWFs and to provide input on the preparation of these principles. Thus, the consensus reached by all participants in the process is broad.
The "Santiago Principles" reflects our commitment to the objectives of these principles. For the time being, we will continue to promote and improve transparency in the provision of the statistics of our SWFs and in the integration within the overall fiscal accounts. We will also support the creation of a formal forum for the exchange of views between SWFs and recipient countries, the International Standing Group (ISG) of SWFs, and support the work of the IMF as a facilitator of this task.
I would like to conclude by encouraging the adoption and dissemination of Generally Accepted Principles and Practices for SWFs. We are convinced that the dissemination and adoption of these principles will result in greater transparency and understanding by home and recipient countries. These principles will serve as a guide for adequate governance and accountability arrangements in SWFs, in addition to leading to appropriate investment practices whose final outcome will be the economic and financial benefits to our countries and their citizens.