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Trump signed an order to create a US sovereign wealth fund, potentially using it to buy TikTok. The fund's details remain unclear, facing challenges as the US operates at a deficit.
UPDATED: Feb 4, 2025 02:49 IST
US President Donald Trump on Monday signed an executive order to establish a sovereign wealth fund, marking the first such initiative in the country. The fund is intended to serve as an economic development tool, with the potential to invest in critical assets, including possibly acquiring the short-video app TikTok.
"We're going to create a lot of wealth for the fund," Trump told reporters. "And I think it's about time that this country had a sovereign wealth fund."
What are Sovereign Wealth Funds
Sovereign wealth funds are typically state-owned investment funds that manage national reserves, often sourced from budget surpluses or revenues from natural resources like oil. These funds are used for economic stabilization, infrastructure development, or long-term wealth preservation. Globally, over 90 such funds manage assets exceeding $8 trillion, according to the Forum of Sovereign Wealth Funds.
Norway currently has the largest sovereign wealth fund, managing more than $1.7 trillion in assets, followed by China Investment Corporation with $1.3 trillion, as reported by the Sovereign Wealth Fund Institute.
Such funds, typically, rely on a country's budget surplus to make investments, but the US operates at a deficit. Its creation also require approval from Congress. However, treasury secretary Scott Bessent emphasized that the administration aims to launch the fund within the next 12 months. "We're going to monetize the asset side of the U.S. balance sheet for the American people," Bessent stated. "There will be a combination of liquid assets and domestic investments as we work to generate wealth for the country."
Possible TikTok acquisition
Trump suggested that the newly proposed sovereign wealth fund could be used to acquire TikTok, which has approximately 170 million users in the country.
"We're going to be doing something, perhaps with TikTok, and perhaps not," Trump said. "If we make the right deal, we'll do it. Otherwise, we won’t... We might put that in the sovereign wealth fund."
The Biden administration had also considered establishing a sovereign wealth fund before the November election, according to reports from The New York Times and Financial Times. However, economic experts have raised concerns over the feasibility of such a fund given the US fiscal situation.
Source: Reuters
Published By:
indiatodayglobal
Published On:
Feb 4, 2025
