Cape Town, Aug 30 (IANS): South African President Cyril Ramaphosa said that while the government remains committed to building a sovereign wealth fund, now is not the most favourable time for its immediate establishment.

He made the remarks on Thursday during an oral reply session at the National Assembly of Parliament in Cape Town, the legislative capital of South Africa. This was his first such session under the Government of National Unity, Xinhua news agency reported.

When asked how the government will develop a sovereign wealth fund and ensure that its development benefits the majority of South African people, Ramaphosa noted that sovereign wealth funds are used by many countries around the world to harness national resources for economic and social development, and they are often used to preserve and grow a country's wealth for the benefit of future generations.

According to him, a document published in December 2021 by the South African National Treasury described some of the features of a sovereign wealth fund, which is often a state-owned company that would accumulate resources for capital investment through a dedicated revenue instrument.

"It would then invest these resources in different asset classes. Countries with sovereign wealth funds broadly maintain surpluses in their current accounts and budget balances. This provides the fiscal space to establish a sovereign wealth fund," said Ramaphosa.

The president, however, insisted that "at present, with our fiscal position, with substantial current account and budget deficits, it is not the most opportune and favourable time for us to establish a sovereign wealth fund."

"Funding for service delivery remains under pressure. Additional resources are required to improve the recruitment of key personnel such as police and teachers. We also need to increase investment in the maintenance of basic service infrastructure," Ramaphosa explained.

The president stressed that the government remains committed to creating a sovereign wealth fund.

"While the conditions do not currently exist to enable the immediate establishment of a sovereign wealth fund, this is an objective to which we should continue to work," he said. "Such a fund could help to ensure that the national wealth of our country is effectively used to support economic and social development for years to come."