A recent Reuters article reports that sovereign wealth funds from oil-producing countries are on track to unload up to $225 billion in equities as “plummeting oil prices and the coronavirus pandemic hit state finances.”

According to JPMorgan strategist Nikolaos Panigirtzoglou, the market tailspin resulting from the pandemic has cost both oil and non-oil based sovereign wealth funds approximately $1 trillion in equity losses (data from the fund as well as from the Sovereign Wealth Fund Institute). Those governments, the article notes, are facing a “financial double whammy—falling revenues due to the spiraling oi price and rocketing spending as administrations rush out emergency budgets.”

Panigirtzoglou said, “It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations.”

Oil-based funds are typically required to keep substantial cash on hand in the event of an oil price collapse or a government funding request, the article explains, citing one source from an oil-based fund that said it had been gradually increasing its liquidity since October 2018 when oil prices began drifting lower.

In 2015, the last time crude prices reportedly collapsed, Saudi Arabia’s central banks “ran down its foreign assets by over $100 billion to cover a huge state budget deficit,” according to the article, which added that this month the country’s finance minister said it would “look to borrow to finance its deficit after announcing an economic support package worth more than $32 billion.”