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Show 1 Answer (Answer provided by Ion Sterpan)
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We can look at it this way: a sinking fund is called that way becuse it is meant to "sink" the debt. It is a means of repaying funds borrowed. Sovereign wealth funds are simply investment funds owned by the state. Because as a matter of fact all states have debts, sovereign wealth funds too help with fiscal consolidation, so they happen to share that function. But in principle, a state which had no debt, could still own a sovereign wealth fund. And there is another difference: sinking funds were funded by taxes. Sovereign wealth funds are typically funded by assets held by the Central Bank or from exports.

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