The records for the Petroleum Fund seem endless. In just over five years, its value has doubled to 20.000 billion kroner.
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Summary
- The Oil Fund has doubled in value as the autumn of 2019, crossing 20.000 billion kroner.
- The growth is due to strong markets, transfers from the government, and a weak crown.
- Chief economist kjersti haugland at DNB Markets believes that Norway has plenty of money, but a scarcity of people and capacity in the economy.
This summary was created by the AI tool ChatGPT and quality assured by E24’s journalists
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The fund’s value growth is driven by strong market upswings, inflows of fresh capital from the government, and a continuing weak crown.
– It has been very surprising that the fund has grown so large and so quickly, says chief economist Kjersti Haugland at DNB markets to E24.
– Part of the reason is the Ukraine war,which sent <a aria-label="gas prices through the roof" class="default hyperion-css-1rezu2g" href="https://www.aftenposten.no/okonomi/i/l36wv7/i-2022-og-2023-tilfoerte-finansdepartementet-nesten-et-helt-statsbudsjett-til-oljefondet-norge-har-tjent-rekordmye-under-ukraina-krigen
The broad American stock index S&P500 has such as risen more than 25 percent this year. Much of the fund’s money is invested in American stocks.
The fund holds shares in everything from Apple and Microsoft to Coca-Cola, Exxon Mobil, and nintendo. At the bottom of this article, you can search and find out how much the Oil Fund owned in each individual company at the end of the first half of the year.
Much larger than expected
However, in recent years the fund has grown far larger than what was anticipated at that time.
With the current value,the government can use a full 600 billion kroner within the fiscal rule,rather of 360 billion if the fund had grown in line with expectations from five years ago.
– Politicians will not use all that money. The fiscal rule means that they make this discretionary and look at what is healthy to inject into the economy. Politicians will probably hold back, says Haugland.
– Not enough people
– We have plenty of money, but we do not have enough people who can create new value in society. When there is a lot of money available, politicians can spend more, but it puts pressure on scarce resources, especially people and capacity in the economy, says Haugland.
– It is important that we do not crowd out what is needed to ensure innovation and a more productive economy in the future. This is something the whole of Europe is struggling with, a lack of growth capacity and increased competition from the USA and China, she says.
using 460 billion next year
The Støre government planned to spend over 460 billion oil kroner next year. The amount increases slightly after the budget agreement with SV.
– There are many angles to that question. One should hold back on spending in consideration of future generations. There could be a huge market crash, and furthermore, the state’s expenses will rise due to an aging population, says Haugland.
– As long as one stays within the three percent rule. But whether the spending is justifiable or not also depends on what the money is being spent on, she says.
The fund’s management has repeatedly warned that the markets could turn downward,but there has never been a larger drop in the fund’s value from one year to the next.
In 2022, fund manager Nicolai Tangen warned that the fund could fall by 5.000 billion at worst.Since then, however, the fund’s value has increased by almost 8.000 billion.
Rapid upswing
Hear are some of the milestones for the fund as 2019:
