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Tuvalu Trust Fund
The Tuvalu Trust Fund is an international sovereign wealth fund established to benefit Tuvalu, a small, central Pacific island nation, by providing income to cover shortfalls in the national budget, underpin economic development, and help the nation achieve greater financial autonomy. The Tuvalu Trust Fund was established in 1987 by the United Kingdom, Australia and New Zealand.
The International Monetary Fund (IMF) 2014 Country Report noted the market value of the Tuvalu Trust Fund dropped during the 2008 financial crisis; however, the IMF 2016 Country Report estimates the total value of the fund had recovered to be AUD$131 million in 2012. The policy of the Tuvaluan government has been to grow the maintained value of the Consolidated Investment Fund (CIF), from which the government can draw funds for government expenditure; during 2016-2020 the government was able to save an average of 6.6% of GDP into the CIF.
In 2022, the value of the Tuvalu Trust Fund was approximately $190 million. In 2021 the market value of the TTF rose by 12 percent to its highest level on record (261 percent of GDP). However, the volatility in global equity markets in 2022 resulted in the TTF’s value falling by 7 percent as compared to the end of 2021.
An agreement to establish the trust fund was signed in Suva, Fiji on 16 June 1987 by representatives of the governments of Tuvalu, Australia, New Zealand and the United Kingdom. The involvement of the United Kingdom in the Suva Agreement was the consequence of Tuvalu having been a Crown colony until 1978, when Tuvalu became an independent nation. Australia and New Zealand became involved in the Suva Agreement as part of the aid programs of those countries to the island nations in the South Pacific, which have limited natural resources or sources of government revenue. The purpose of the fund (as stated in the Suva Agreement) was to contribute to the long-term financial viability of Tuvalu by providing an additional source of revenue for recurrent expenses of the Government of Tuvalu.
On 10 November 2023, Tuvalu signed the Falepili Union, a bilateral diplomatic relationship with Australia, under which Australia will increase its contribution to the Tuvalu Trust Fund and to the Tuvalu Coastal Adaptation Project (TCAP). Australia will also provide an pathway for citizens of Tuvalu to migrate to Australia, to enable climate-related mobility for Tuvaluans.
At the commencement of the trust fund, Tuvalu provided A$1.6 million, the United Kingdom donated A$8.5m, Australia A$8.0m and New Zealand A$8.3m. Japan later donated A$700,000, then South Korea later donated A$30,000, bringing the total up to about A$27.1 million. The United Kingdom withdrew from the agreement in 2004. Australia and New Zealand continue to support the Tuvalu Trust Fund and provide other forms of development assistance. Japan and South Korea have also made donations to the fund. Tuvalu's initial contribution to the fund was AUD$1.6 million and Tuvaluan contributions total AUD$29.8 million, which makes Tuvalu the major contributor to the Fund.
As the result of successful investments made by the fund managers, the initial assets of AUD$27 million grew to AUD$66 million in 2000. In the first twenty years of operation to 30 June 2007, the real rate of return on the fund has averaged 6.2 percent per annum providing AUD$65.7 million in revenue to Tuvalu, of which AUD$24.1 million has been used to help fund budget deficits; AUD$29.2 million has been reinvested in the fund; and AUD$12.4 million was held in the CIF and was available to be drawn down by the Government of Tuvalu. The performance of the Tuvalu Trust Fund and the Consolidated Investment Fund (CIF) from 2010 to 2018 was as follows:
The 2022 to 2025 values of the Tuvalu Trust Fund and the Consolidated Investment Fund (CIF), are as follows:
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Tuvalu Trust Fund
The Tuvalu Trust Fund is an international sovereign wealth fund established to benefit Tuvalu, a small, central Pacific island nation, by providing income to cover shortfalls in the national budget, underpin economic development, and help the nation achieve greater financial autonomy. The Tuvalu Trust Fund was established in 1987 by the United Kingdom, Australia and New Zealand.
The International Monetary Fund (IMF) 2014 Country Report noted the market value of the Tuvalu Trust Fund dropped during the 2008 financial crisis; however, the IMF 2016 Country Report estimates the total value of the fund had recovered to be AUD$131 million in 2012. The policy of the Tuvaluan government has been to grow the maintained value of the Consolidated Investment Fund (CIF), from which the government can draw funds for government expenditure; during 2016-2020 the government was able to save an average of 6.6% of GDP into the CIF.
In 2022, the value of the Tuvalu Trust Fund was approximately $190 million. In 2021 the market value of the TTF rose by 12 percent to its highest level on record (261 percent of GDP). However, the volatility in global equity markets in 2022 resulted in the TTF’s value falling by 7 percent as compared to the end of 2021.
An agreement to establish the trust fund was signed in Suva, Fiji on 16 June 1987 by representatives of the governments of Tuvalu, Australia, New Zealand and the United Kingdom. The involvement of the United Kingdom in the Suva Agreement was the consequence of Tuvalu having been a Crown colony until 1978, when Tuvalu became an independent nation. Australia and New Zealand became involved in the Suva Agreement as part of the aid programs of those countries to the island nations in the South Pacific, which have limited natural resources or sources of government revenue. The purpose of the fund (as stated in the Suva Agreement) was to contribute to the long-term financial viability of Tuvalu by providing an additional source of revenue for recurrent expenses of the Government of Tuvalu.
On 10 November 2023, Tuvalu signed the Falepili Union, a bilateral diplomatic relationship with Australia, under which Australia will increase its contribution to the Tuvalu Trust Fund and to the Tuvalu Coastal Adaptation Project (TCAP). Australia will also provide an pathway for citizens of Tuvalu to migrate to Australia, to enable climate-related mobility for Tuvaluans.
At the commencement of the trust fund, Tuvalu provided A$1.6 million, the United Kingdom donated A$8.5m, Australia A$8.0m and New Zealand A$8.3m. Japan later donated A$700,000, then South Korea later donated A$30,000, bringing the total up to about A$27.1 million. The United Kingdom withdrew from the agreement in 2004. Australia and New Zealand continue to support the Tuvalu Trust Fund and provide other forms of development assistance. Japan and South Korea have also made donations to the fund. Tuvalu's initial contribution to the fund was AUD$1.6 million and Tuvaluan contributions total AUD$29.8 million, which makes Tuvalu the major contributor to the Fund.
As the result of successful investments made by the fund managers, the initial assets of AUD$27 million grew to AUD$66 million in 2000. In the first twenty years of operation to 30 June 2007, the real rate of return on the fund has averaged 6.2 percent per annum providing AUD$65.7 million in revenue to Tuvalu, of which AUD$24.1 million has been used to help fund budget deficits; AUD$29.2 million has been reinvested in the fund; and AUD$12.4 million was held in the CIF and was available to be drawn down by the Government of Tuvalu. The performance of the Tuvalu Trust Fund and the Consolidated Investment Fund (CIF) from 2010 to 2018 was as follows:
The 2022 to 2025 values of the Tuvalu Trust Fund and the Consolidated Investment Fund (CIF), are as follows:
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