South Africa will create a 30 billion South African rand ($2 billion) sovereign wealth fund using the proceeds of state assets sales, gas royalties and other sources of income.
Minister of Finance Tito Titus Mboweni outlined details of the South African Sovereign Wealth Fund in his 2020 budget speech Wednesday.
"A sovereign wealth fund is an important long-term tool for saving and investment for future generations," Mr. Mboweni said, according to a copy of the speech published on the National Treasury website. "It can also contribute to strengthening the fiscal framework. We must learn to save during the good times, and a fund can play an important role as a countercyclical fiscal tool."
The sovereign wealth fund proposal comes as South Africa struggles with rising debt, sluggish economic growth and a budget deficit that is set to widen to 6.8% in the coming fiscal year — a three-decade high. The establishment of a sovereign wealth fund was first proposed at least 10 years ago.
Possible funding for the sovereign wealth fund includes "the proceeds of spectrum allocation, petroleum, gas or minerals rights royalties, the sale of non-core state assets, future fiscal surpluses and money we set aside. This will ensure that we continue to invest in the future generations of this country in a fiscally prudent manner," Mr. Mboweni added.
He said a relevant bill will be submitted to the country's Parliament. He did not specify a date.
Bloomberg contributed to this story.