Sigbjørn Johnsen, Norway’s minister of Finance, has reiterated the strength of the country’s sovereign wealth fund in his briefing on the latest proposed Budget.
He said that the country’s economy overall was performing better than predicted in May this year despite the strength of NOK hitting exporters in sectors other than oil and gas.
He has called for a “fiscally neutral” Budget, but in mind of supporting those sectors exposed to weaker eurozone markets, and that are struggling with the side-effects of the NOK becoming a safehaven currency, thus driving up its value relative to the dollar and euro.
Johnsen said so-called capacity utilisation remains higher that forecast in May, interest rates remain low – despite concerns about a residential property price bubble at the central bank – and oil prices remain at levels that mean assumed real return from the country’s sovereign wealth fund – the Pension Fund Global – remain in line with 2001 fiscal policy guidelines adopted by the country’s Parliament.
“The guidelines allow automatic stabilisers to work fully over the business cycle, and additional fiscal measures can be spent to counter economic fluctuation,” the ministry of Finance said in a statement.
“The government has over the years made ample use of this flexibility. In 2009 the use of petroleum revenues increased rapidly to mitigate the effects of the global recession on production and unemployment. In 2011 and 2012 the spending of petroleum revenues was again brought below the 4% path.”
Net cash flow from petroleum activities is estimated at NOK373bn (€50.4bn at current exchange rates) through 2013, the ministry said.
The non-oil fiscal deficit is estimated at NOK123.7bn, which will be financed by a transfer from the Pension Fund Global. The Norwegian government has estimated a market value for its overall pension fund at the end of 2013 of NOK4,425bn (€598.4bn), of which NOK4,280bn (€578.8bn) will be in the Global fund.
Meanwhile, the consolidated surplus on the Budget and the Government Pension Fund, including NOK131bn in interest and dividends, is estimated at NOK380bn, or 12.7% of GDP.