What Is the State General Reserve Fund?

The term State General Reserve Fund refers to a sovereign wealth fund that was established in 1980 by the Sultanate of Oman, an Arab nation whose principal export is oil. The fund was created to manage the investments of Oman's revenues, with the objective of ensuring the country's economic stability and sustainable development.

The fund was administered by Oman's Ministry of Finance. It was combined with the Oman Investment Fund to create the Oman Investment Authority in 2020.

Key Takeaways

  • The State General Reserve Fund was a sovereign wealth fund of the Sultanate of Oman. 
  • It was established in 1980 to manage profits from the state's oil revenues, diversify Oman’s income sources, and promote local economic development.
  • The SGRF was dissolved and merged with Oman’s other sovereign wealth management funds to form the new Oman Investment Authority. 

Understanding the State General Reserve Fund

Oman's Ministry of National Economy considered the establishment of the State General Reserve Fund as the most prominent achievement of the nation's first five-year development plan, which covered the period from 1976 to 1980. This period of time coincided with a boom in the world's oil prices. At the time, oil supplies dropped, causing a shock to the international oil market. Demand increased, raising prices dramatically.

The sovereign wealth fund invested the financial surplus forwarded to it. It was designed to boost its reputation in the international economic and financial sector. Its aim was to do the following:

  • Maximize investment revenues and administer them in a way that minimized risk
  • Make investments and earn revenue by distributing its risk criteria
  • Strategically direct investment for the long-term
  • Attract international investments
  • Promote and develop local investments
  • Promote economic development in Oman

The fund's investment portfolio was diversified across 25 countries, with a wide range of sectors in addition to strategic investments to ensure sustainable long-term returns. The fund's investments included tradable assets in the public market including global equity, fixed income bonds, and short-term assets.

The fund also invested in private, non-tradable assets such as private real estate investments, logistics, commercial and industrial projects as well as other services. For instance, the fund acquired a 30% stake in Corporate Commercial Bank—Corpbank for short—Bulgaria's tenth-largest bank in terms of assets. The acquisition was completed in January 2009 for an undisclosed sum.

The State General Reserve Fund was officially dissolved after it was merged with the Oman Investment Fund and the Directorate General of Investments at the Ministry of Finance by royal decree in June 2020 to form a new legal entity called the Oman Investment Authority.

The assets and employees of each were transferred to the new organization. The move consolidated the country's sovereign wealth funds under a single organization at a time when Oman was under intense fiscal pressure from low oil prices. The fund's assets were estimated at more than $14.3 billion at the time of the merger, while the Oman Investment Fund was valued at $3.4 billion, according to a report from Pensions and Investments.

The $18 billion Oman Investment Authority was formed in 2020 by merging the State General Reserve Fund and other legal entities—all of which had the same investment goals.

Special Considerations

The newly formed Oman Investment Authority invests in more than 35 different international markets, allocating anywhere between 65% to 85% in publicly-tradable assets, while the remaining portion is invested in private ventures. The primary area of investment lies in Europe, followed by the Asian and African markets. Limited investments are held in South and North America as well as Australia. Its objectives remain the same as the State General Reserve Fund.