Prepared by:
Ms Puara. Tanei
Economic Adviser
Planning & Budget Department
6-8 September 2012
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
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Outline
 How TTF was Established
 Objective
 Trust Fund Model
 Capital
 Governing body
 Legal status
 Benefits & Costs of TTF
 Lessons Learnt
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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How TTF was established:
 1986 Budget Deficit Worries ($800,000)
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Options Available:
Copra
Stamps
Handicrafts
Fishing
TRUST FUND – YES, best option BUT with a
HIGH targeted Initial Capital of $26 million
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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Objective:
The TTF therefore aims to:
 Assist the Government to achieve greater financial authority in
the management of its recurrent budget;
 Enable the Government to maintain and if possible improve
existing levels of social infrastructure and services;
 Enhance the capacity of the Government to receive and
effectively utilize external capital development and technical
assistance;
 Enable the Government to meet long-term maintenance and
operating costs of social and economic infrastructure and
services; and
 Assist the Government to develop the economy of Tuvalu.
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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Trust Fund Model
Figure 1:
Intermittent
Contributions
Initial capitals
from Trustees
Distributio
ns
Consolidated
Investment Fund
(exclusively Govt
controlled)
Recurrent
Budget
Reinvested
earnings
Additional
contributions
Tuvalu Trust
Fund
(Investments)
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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Capital
The TTF was initially capitalized with AUD$27.1 m in
‘donor donations’ from :
• UK (AUD$8.5 m), NZ (AUD$8.282 m), Australia
(AUD$8 m), Tuvalu (AUD$1.6 m), Japan (AUD$695,000)
& South Korea (AUD$31,000).
Since establishment there have been additional
donations from donors totaling to AUD$38.6m which
comprises:
• AUD$6.4 m from Australia, AUD$3.2m from NZ,
AUD$37,821 from South Korea, and AUD$28.2m from
GoT. Note, Tuvalu is the Fund’s largest contributor
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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Capital - cont
 The TTF capital is invested in a balanced
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portfolio of equities and fixed interest securities in
international financial markets in Australia &
around the world.
CIF as ‘buffer’ to support the Government’s
Recurrent Budget
Real Value of TTF adjusted to Australian CPI
‘Disciplined’ draw downs from CIF to finance
budget deficits
Accession of TTF Capital is highly discouraged
6-8 September 2012
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
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Tuvalu Trust Fund
Tuvalu Trust Fund and Consolidated Investment Fund
(as at 30 September)
140.0
120.0
100.0
$ million
80.0
60.0
40.0
20.0
0.0
1987
1989
1991
1993 1995 1997 1999
Automatic Distribution
TTF Market Value
2001
2003 2005
2007
CIF
TTF Maintained Value
2009
2010
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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Governing Body
 Board of Directors
 Professional Fund Managers
 Professional Consultant actuaries
 Advisory Committee
 Secretariat
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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Legal Status:
 The establishment of the TTF was marked by the
signing of an international agreement between The
Tuvalu Government and potential donors in Suva on
16 June 1987.
 The purpose of the Fund (as stated in the
International Agreement) is to contribute to the longterm financial viability of Tuvalu by providing an
additional source of revenue for recurrent expenses of
the Government of Tuvalu.
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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Costs & Benefits of TTF:
Benefits
Challenges/Cost
- The success of the trust fund has - Growing & maintaining the size
gained a positive reputation for of the Fund to ensure adequate
Tuvalu.
total revenue & grant availability
for intended use.
-The Fund has been seen as an
excellent alternative mechanism
for delivering untied development
aid to a developing country
- Maintaining parties to the Fund
Agreement over a long period of
time that ensure viability and
integrity of the structure of
decision making.
- Tuvalu has managed to
demonstrate that a trust fund set
up can have significant positive
impacts on national budget and
the economy as a whole;
- It would be a challenge to
differentiate climate related
finance from normal ODA
invested into such a general
development Fund.
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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Costs & Benefits of TTF – cont.
Benefits
Challenges/Costs
-The TF distributes earnings to the
Government of Tuvalu to buffer
unexpected situations like financial
crises or natural disasters;
- Regardless of its success, the TTF is
still prone to the effects of global
financial crises due to the smallness of
the Fund size.
-The Fund is a successful model for
multinational and multiparty
governance arrangements.
- Difficulties in determining if the
Fund has made any tangible difference
in the lives of the people of Tuvalu apart
from using the CIF to supplement the
government budget in times of shortfall
to the budget revenues.
The TTF structure is innovative and
efficient.
6-8 September 2012
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
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Lessons learnt
 The model of the TTF
 Prudent financial management
 Strong ownership and relationship with partners
Regional Clinic on the Design and Management of NCFs Bangkok ,Thailand
6-8 September 2012
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THANK YOU
6-8 September 2012
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