Pacific / New Caledonia

Sovereign wealth fund proposed for New Caledonia

09:04 am on 27 March 2017

An economic analysis council has recommended a sovereign wealth fund be established in New Caledonia.

The territory's economy is largely reliant on a nickel industry that has been struggling in recent years, topped up by transfers from France.

Since 2011, New Caledonia's economic growth has weakened as global nickel prices have steadily dropped.

To offset the gradual disappearance of the resource, the council, in a report to the Prime Minister, recommends a sovereign fund to compensate for this.

The newspaper, Les Nouvelles Caledoniennes, said the report claims a fund would capitalise on a fraction of nickel revenues, while smoothing the effect of price fluctuations.

With contributions from France, it could also be used to diversify the New Caledonian economy, which has few other export sources.

A sovereign wealth fund has long been advocated by economists, as well as politicians in the territory, including the New Caledonian president, Philippe Germain.