– The fund now covers over 20 per cent of the expenditure on the state budget. If the fund falls sharply in value, we will find ourselves in a very vulnerable situation. That’s according to economics professor Steinar Holden at the University of Oslo. He believes that the current rules of procedure for withdrawals from the Oil Fund have major weaknesses. But they are hidden by the fact that we now have unusually high income from the oil and gas industry. And a weak crown. The krone crash makes investments in foreign currency look bigger. Professor Steinar Holden at UIO Photo: Berit Roald / NTB scanpix But what happens if the fund falls sharply in value and it takes a long time before it returns to its old level? At the same time as the need to spend more money from the national budget increases? When the politicians have then become accustomed to spending close to 3 per cent of a large fund each year, the result can be a gaping hole in the state’s finances. Until recently, Professor Holden chaired the government’s advisory committee for fiscal policy analysis, which recommended that politicians revise the policy. Will scrap the current percentage rule A new rule should rather take account of the cash flow to the fund. In practice, there will be income from interest-bearing securities and dividends from the limited companies that the fund owns. Such cash flows are more stable than a percentage of the entire fund, which can fluctuate more over time. – This is certainly something that should be considered, says Holden. If the withdrawals from the fund grow faster than the growth in the economy, there may be less left for the generations that come after us. Terrified by politicians’ indifference Professor emeritus Knut Anton Mork at NTNU chaired the Mork committee a few years ago, which advised the government on how large a share of shares the fund should have. Photo: Vidar Ruud / NTB scanpix Knut Anton Mork is professor emeritus at NTNU. – I am really scared of the dark about how indifferent leading Norwegian politicians are to the rules of action. They should take this very seriously, the sooner the better, he says. A few years ago, he led a committee, which advised the government on a large proportion of the shares the fund should own. Mork has been researching the fund for several years – and believes it is very important that financial politicians look at the action rule through freshly cleaned glasses. – No one asks what the action rule actually entails, what it will lead to, says Mork. He believes that there is a real and significant probability that the fund could be depleted within a few decades with the current rule. – We have to think about those who are living now, says Finance Minister Vedum. Photo: Lars Os / news – We must spend much less than the current 3 per cent of the fund each year if future generations are to benefit from it as we do. Maybe half, he says. Next year, the politicians plan to spend 410 billion. This amounts to 2.7 per cent of the fund. Former Oil Fund manager Knut Kjær also warned at the weekend in DN that lean times are ahead and that the fund could be depleted. Vedum: – Must think about the generation living now Finance Minister Trygve Slagsvold Vedum is happy about the commitment, but will not take the initiative for a new review of the code of conduct now. – I think it is very good that they come up with that type of input, because the point is how to finance basic welfare benefits for you and me now without increasing taxes. And how the next generation can do the same. And the generations after that, he says. – A number of leaders of the youth parties have advocated that the action rule should have been reduced from 3 per cent to 2 per cent. Wouldn’t that have made sense when the fund has become so large? – No, I completely disagree with that. Because the point is to give people prosperity. It is completely wrong if you only think about the next generation. We have to think about the generation that lives now, he says.
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Will have a new operating rule for the Oil Fund – news Norway – Overview of news from different parts of the country
