Sovereign wealth funds are not a new phenomenon on the global financial scene, even if they witnessed rapid growth at the end of the twentieth century and the beginning of the third millennium. At the beginning of the first decade of the current century, the global economy witnessed the rapid development of this phenomenon and its emergence as a competitor to financial institutions operating at the level of global financial markets in terms of assets under management. Therefore, many oil countries, which have natural resources, were keen to diversify their sources of financing by developing new financing mechanisms alternative to external sources of financing by establishing special funds to exploit the financial surpluses achieved during times of high oil prices, and to exploit these resources, most of which are depleted, in financial investments and development programs, they are special purpose investment funds owned by the government and undertake the employment or management of their funds to achieve financial goals, using investment strategies that include Investing in foreign financial assets. Sovereign wealth funds work towards multiple objectives, as they are a huge source of financing.
Similar to the experiences of the Gulf countries in establishing sovereign wealth funds, a sovereign fund can be established for Iraq based on allocating part of the total oil revenues and depositing them in a fund that invests its funds through a wide range of global financial investment tools, to accommodate the goals of development, stability, savings, and investment, as sovereign funds can bridge the gap between the needs of investment growth and reduce dependence on external financial resources, In addition, the establishment of a sovereign fund in Iraq is a positive step that can be used to support the stability of the national economy, and to provide a sustainable source of financing for various development policies and programs. Some suggest the need to establish two funds, the first includes the Iraqi Oil Revenue Deposit Fund, which distributes its revenues directly to citizens by allocating up to 25% of the revenues, while the second includes a fund that allocates and distributes part of the oil revenues to local and regional administrations according to the number of inhabitants. The application of this model can contribute to achieving political and economic advantages that will develop the oil industry as a result of the political pressure generated by the citizens who receive these payments, and the regular incomes resulting from the distribution of oil shares to citizens will work to pave the way for the development of credit markets by allowing individuals to borrow from banks guaranteed by the income derived from oil shares, in addition to that the Iraqi government’s continued distribution of oil wealth will help achieve stability Political and alleviating the pressures of ideological, sectarian and ethnic divisions and conflicts that characterize the status quo. Finally, this fund can control government revenues and thus reduce its dominance over the economy.
