National Budget 2009

National Budget 2009

These pages contain information in English about Norway's National Budget for 2009, presented to the Storting as Report no. 1 (2008-2009) on 7 October 2008. The National Budget presents the Government's programme for the implementation of economic policy and projections for the Norwegian Economy.

Royal Norwegian Ministry of Finance

Kristin Halvorsen
Minister of Finance
October 2008

Key Figures 2009: Overview and rates of direct and indirect taxes

Supporting Stable Development of the Norwegian Economy

The Government Pension Fund Global: Prudent and long-term management

National budget 2009 - Chapter 5

Press Release






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The Government Pension Fund Global: Prudent and long-term management

The investment strategy for the Government Pension Fund is robust, long-term and well-equipped to deal with financial market turmoil.

- Financial turmoil has resulted in poor returns on the Government Pension Fund’s equity portfolio, while fixed income returns have held up better. At the same time, net inflow, from petroleum revenues, has been higher than expected. The estimate of the Pension Fund – Global increasing to NOK 2 300 billion at the end of 2008 remains unchanged, as we predicted in the Revised National Budget in May. The Fund’s capital thus looks to be higher than ever at year-end, says the Norwegian Minister of Finance, Ms Kristin Halvorsen.

- With a robust and long-term investment strategy, we remain confident that the Fund over time will deliver good returns with moderate risk. Investments are made on the basis on what is best for the Fund in the long run, and recent developments have not lead us to review the strategy, says Ms Halvorsen.

- The strategy of gradually transforming our petroleum wealth to financial assets worldwide makes us more diversified and less vulnerable. The Fund is invested in more than 7 000 equities and bonds from more than 1 600 issuers in over 50 countries worldwide. It is the development in the aggregate equity and bond markets over several years that are the key drivers of the Fund’s returns and its ability to finance welfare for current and future generations, says the Norwegian Minister of Finance, Ms Kristin Halvorsen.

The Fund has a high risk bearing capacity and long time horizon. A well-diversified investor with a robust investment strategy typically gets well paid for assuming investment risk during periods of market unrest and high risk premia. The work on increasing and diversifying the Fund’s investments continues, in line with earlier decisions to raise the equity allocation and include small caps and emerging markets in the equity benchmark of the Pension Fund – Global (PFG). At the same time, work continues on formulating guidelines to invest up to five per cent of the Pension Fund – Global in real estate over time.

Chapter five of the National Budget 2009 describes the management of the Government Pension Fund. In addition to presenting the Fund’s results, there is an update on current issues such as the evaluation of the ethical guidelines and the international debate on Sovereign Wealth Funds.


APPENDIX: Background information on the Government Pension Fund
The Government Pension Fund was established by Act in 2006 to support a long-term management of petroleum revenues and facilitate the government’s accumulation of financial assets in order to help cope with large, future financial commitments associated with an ageing population. The Fund consists of the Government Pension Fund – Global (formerly known as the Petroleum Fund, established in 1990) and the Government Pension Fund – Norway (formerly known as Folketrygdfondet, established in 1967).

The inflow of the Pension Fund – Global (PFG) consists of all state petroleum revenues, net financial transactions related to petroleum activities, as well as the return on the PFG’s investments. The outflow from the Fund is the sum needed to cover the non-oil budget deficit. The PFG is thus fully integrated with the state budget and net allocations to the fund reflect the total budget surplus (including petroleum revenues). Fiscal policy, which regulates the outflow from the fund, is anchored in a guideline where the structural, non-oil budget deficit shall over time correspond to the real return on the PFG, estimated at four percent.

The Pension Fund – Norway (PFN) originates primarily from surpluses in the national insurance accounts until the late 1970s. The return on the assets is added to the fund, and there are no transfers between the PFN and the fiscal budget.

The governance structure of the Government Pension Fund is marked by a clear division of responsibilities between the political authorities and the operational management. Under the Pension Fund Act, the Ministry of Finance has been charged with managing the Fund. The Ministry determines the general investment strategy of the Fund (which includes setting a benchmark and risk limits), establishes the Fund’s ethical and corporate governance principles, and exercises oversight over the operational management. Within these limits, there is full delegation of operational management to Norges Bank and Folketrygdfondet, which have been charged with the operational management of the PFG and the PFN, respectively. Of the Pension Fund capital on 30 June 2008 of NOK 2 104 billion (around USD 415 billion), NOK 1 991 billion was attributed to the PFG and NOK 113 billion to the PFN.

The Pension Fund has a long investment horizon and a very diversified investment strategy. The Fund is invested globally in a large number of financial instruments in order to get a broad diversification and achieve good investment returns with moderate financial risk. The Fund is managed with a view to maximizing return, given a moderate level of risk. This enables future generations to benefit from the savings as well. At the same time, the Fund as an investor shares responsibility for the conduct of the companies in which the Fund invests. The Government is therefore concerned that ownership interests in the companies in which the Fund invests is exercised with a view to promoting good and responsible conduct, showing respect for human rights and the environment.

The management of the Fund is subject to a high degree of transparency. The Storting is informed of the investment framework and the Ministry’s oversight through an annual white paper each spring, and the operational managers Norges Bank and the Folketrygdfondet also report publicly on a regular basis.

More information on the Fund is available on the internet at