This Thursday, the President of the Government, Pedro Sánchez, announced the creation of a sovereign fund in Spain to invest in the large key sectors for the future growth of the country. A plan that, without going into how positive or achievable it is, encounters a problem of definition: what Sánchez has described, a fund managed by the ICO, built on unused European ‘Next Generation’ funds, and financed by private contributions, does not fit into any of the models of what a sovereign fund is. There is only one thing that resembles it: that of the United Kingdom, a former investment bank that has had its name changed.
The first person to define sovereign wealth funds was Andrew Rozanov of State Street Global Advisors in 2005. In his definition, a sovereign wealth fund is dedicated to accumulating money from budget surpluses caused by “favorable macroeconomic, commercial and fiscal positions.” There are two main types: those of countries with oil or other valuable raw materials, and those of countries with a very positive balance of payments and that have accumulated enormous amounts of foreign exchange reserves.
The idea behind the first type is very simple: instead of wildly spending all the money earned in the ‘good times’, it is better to fasten your belt, moderate your budgets and save as much as possible so that, when global demand for oil falls or the country’s reserves run out, the Government does not suddenly go from wealth to absolute poverty. The economic catastrophe of countries like Venezuela shows why the idea has been so successful. Currently, Virtually all major oil nations have such a fund.: You only have to look at Saudi Arabia, Qatar, Norway, Kuwait, Kazakhstan… Even two US states, Texas and Alaska, have one of this type.
The other example is that of the large Asian countries that have such an exaggeratedly positive balance of payments, with a gigantic trade surplus, that their central banks have accumulated excess reserves in foreign currencies. The decision of their governments has been use that money to invest and obtain a return. In these cases, we are talking about countries like Japan, South Korea, China or Singapore.
In all cases, the key is that there is a surplus of income. And that is a key aspect when talking about a sovereign fund. Spain and Sánchez’s future plan would not fall into this parameter. There is no surplus, nor a raw material that is a great source of wealth in the country to be able to announce a sovereign fund.
The last budget surplus was signed by José Luis Rodríguez Zapatero in 2007; and although the balance of payments has been in surplus since 2012, the money still does not compensate for the enormous deficits accumulated between 2002 and 2011. It was almost twenty years ago, and although the country was on the verge of an enormous economic crisis, there was an open debate about converting the Pension Reserve Fund into a kind of sovereign fund to support future pension payments. At that time, there were more than 65 billion and they were invested in public debt with low returns. The proposals came more from the academic or journalistic world, but the aim was to follow in the footsteps of Norges Bank, Norway’s sovereign fund, with great freedom for its investments. The entity puts the oil surpluses outside the country and mainly in variable income. At the end of 2025, it had a stake in more than 8,500 listed companies around the world.
There is a long tradition in the world of large national pension fundswhich invest workers’ money to achieve the necessary profitability to compensate for future inflation and increase the money that retirees will take home in the future. These funds mainly exist in countries where, unlike in Spain, there is no Social Security system in which workers pay retirees in real time, but rather the contributions are accumulated in an individual account from which each person can begin to collect upon reaching the regulatory age.
Sovereign funds for all
What Sánchez has proposed is far from the capacity of the sovereign funds. The fund from Norway, Japan or China reaches billions. Simply, There is a remainder of 10.5 billion from the funds already allocated by Brussels and that the Government calculates that it will not have time to spend before 2026 expires. These are the Next Gen funds that were activated in the pandemic to relaunch the economic activity of the most affected countries. Nothing to do with a sovereign fund that seeks profitability in its investments. The Government wants not to lose the energizing effect of European funds for the economy.
The 200,000 million of committed capacity They will only arrive if private investment mobilizes capital in the plans that Moncloa has designed. It is a way to find support to develop a national industrial strategy with private resources. Without going any further, Donald Trump promised to create a sovereign fund of this type in the US, despite the fact that the country has a stratospheric trade deficit and that its budget deficit doubles the maximum allowed in the EU.
One of the formulas to create this type of funds was transfer large companies and state assets to a state portfolio. This model has historically existed in countries such as Belgium or Austria, and has been copied by others such as Greece, or rather adapted for the participations that the State still has in the bailouts of the private sector in the sovereign debt crisis that it suffered from 2010 to 2015. The equivalent would be if, for example, Spain transferred the SEPI (with Correos, RTVE, Redeia and its participations in Indra, Telefónica, Talgo, Airbus or Ebro Foods, among others) to said fund.
The closest thing that exists is the British National Wealth Fund, originally born as the UK Infrastructure Bank. Its objective is to raise private funds and, along with public investments in infrastructure, invest in green technologies, advanced manufacturing or digital development, goals very similar to those announced by Sánchez. British capacity amounts to 27 billion and it can be said that public and private collaboration works. Sánchez has announced a sovereign fund, but What comes out of the proposal is going to look very little like a sovereign fund.
