Revenue Equalization Reserve Fund
What Is the Revenue Equalization Reserve Fund?
The term Revenue Equalization Reserve Fund alludes to a sovereign wealth fund set up by the government of Kiribati, an independent republic situated in the Pacific Ocean. Kiribati is part of the group of islands known as Micronesia. The fund was laid out in 1956 when the nation was under British rule. It was developed to assist with offsetting any volatility and budgetary requirements originating from Kiribati's limitations in economic growth and exposure to outside shocks.
Understanding the Revenue Equalization Reserve Fund
Sovereign wealth funds are state-owned investment funds developed and worked by a country's government. The purpose of these funds is to help the economy and its residents. Funding generally comes from surplus revenues, like trade and resource revenues, as well as government transfer payments and bank reserves.
As verified over, the Revenue Equalization Reserve Fund was laid out in 1956 when the country was a British state. The island nation made the fund to oversee earnings from the country's phosphate mining industry, which represented over half of the country's revenue when it was laid out. It was likewise the country's biggest export at that point. By the late 1970s, the country exhausted its phosphate deposits, and the per capita gross domestic product (GDP) was cut in half somewhere in the range of 1979 and 1981. Since that time, Kiribati has generally relied upon foreign aid, the travel industry, and the sale of fishing rights.
As per the Sovereign Wealth Fund Institute, the Revenue Equalization Reserve Fund positioned number 71 among the world's biggest sovereign wealth funds with a total of $608.52 million in assets. The Kiribati government is the sole owner, trustee, and beneficiary of the fund and has complete authority over how its money is invested and distributed. Drawdowns from the fund are limited. It depends on reinvesting its annual earnings.
Making a trip to Kiribati? The country involves the Australian dollar as its currency.
Special Considerations
The Republic of Kiribati was known as the Gilbert Islands when it turned into a British protectorate in 1892. The country acquired its independence from the United Kingdom in 1979 and was recognized by the United States in 1983. The area was an inconceivably active part of the Pacific venue during World War II. The Japanese occupied Tarawa Atoll and different islands from 1941 to 1942, and the Battle of Tarawa — which occurred in November 1943 — was one of the bloodiest fights in U.S. Marine Corps history.
The 2020 Index of Economic Freedom positions Kiribati as a curbed nation, positioning in the 172nd spot. The index puts together its rundown with respect to several factors including rule of law, government size, regulatory effectiveness, and open markets. It is isolated, has a delicate environment, and limited natural resources. The site records the population at 100,000 occupants. The economic conditions are as per the following:
- GDP: $0.2 billion
- Inflation: 1.9%
- Unemployment: 30.6%
As per World Bank data, the country's gross national product (GNP) — which it alludes to as gross national pay — was $3,350 per capita in 2019. This makes it perhaps of the most unfortunate country in Oceania.
The country is likewise at the center of the climate change crisis and is one of the world's least lying countries. All in that capacity, the government has been thinking about options to empty its occupants as it expects rising sea levels will cover the islands completely.
Features
- The Revenue Equalization Reserve Fund is a sovereign wealth fund set up by the government of Kiribati.
- The fund positioned number 71 among the world's biggest sovereign wealth funds with assets totaling $608.52 million.
- The fund depends on reinvesting its annual earnings and drawdowns are limited.
- It was laid out in 1956 to oversee earnings from the country's phosphate mining industry.
