Norway's piggy bank is empty in 27 years

Norway's piggy bank is empty in 27 years
The Government Pension Fund, commonly referred to as The Oil Fund (Norwegian: Oljefondet), is a fund into which the surplus wealth produced by Norwegian petroleum income is deposited.

As of the valuation in June 2011, it was the largest pension fund in the world, but it is not a pension fund in the conventional sense as it derives its financial backing from oil profits, not pension contributions. As of 2 May 2016 its total value is NOK 7 trillion ($873 billion), holding one percent of global equity markets. With 1.78% of European stocks, it is said to be the largest stock owner in Europe.

Now calculations show that the Oil Fund will be out of money in about 27 years if the increase in spending continues at the current pace.

It is chief economist at DNB Markets, Øystein Dørum, who has done the math for the newspaper Klassekampen. The question was originally posed by the Labor Party to the Ministry of Finance in connection with the budget work in Parliament, but Minister of Finance, Siv Jensen, refuses to answer.

- It makes little sense to make such calculations, sounds the reasoning given to the newspaper.

Labour's fiscal spokesperson Marianne Marthinsen believes that Jensen is trying to wriggle away from something discomforting.

- To answer that such a calculation does not make sense, is an admission that the spending is completely off course, she said.

Dørum emphasizes that the math is theoretical:

"It seems unrealistic that future governments will control government finances blindly toward the abyss, such as the calculations show," he says.

But that does not mean that the math is without value. Dørum has in fact also made alternative calculations where the pace in spending is reduced by half of what it has been in years 2014-2017 and with a real return of 4 per cent. Even with such assumptions the fund will be emptied eventually.

"This illustrates that the fiscal policy should be tightened significantly for the Fund's capital to be preserved for future generations," says Dørum.

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