Oil revenues continue to pour into Norway but government officials won’t use them to build all the new schools, roads or railways the country needs. Instead, Finance Minister Sigbjørn Johnsen defends investing the money outside Norway through the country’s so-called Oil Fund, instead of at home.
Calls continue to rise for Norway to invest more of its oil wealth in its own public infrastructure and public services. Many can’t understand why residents of Norway, as a nation made wealthy by its oil, must continue to tolerate, for example, inadequate highway systems, roads full of potholes, old schools with poor indoor ventilation and a train system that’s still plagued by delays and breakdowns. Only the Progress Party, Norway’s most conservative, has urged using more of the oil money at home instead of investing it overseas.
In a lengthy interview with newspaper Aftenposten this week, Johnsen patiently tried to explain once again why it’s more important for Norway to stash away its oil wealth and save it for future generations, than it is to spend more of it on today’s perceived needs.
“The population is aging and the number of people over age 67 will double during the next 10 years,” Johnsen said. “Even after pension reform, a larger portion of the money we generate must go to pensions and care for the elderly.”
That’s why it’s so important, he said, to set aside the oil revenues and invest them for future generations, to avoid having to heavily tax those in the workforce 10 years from now and beyond.
But why not invest the money in Norway, instead of investing it in overseas stock markets and, most recently, real estate in London? Investing is, after all, not the same as simply spending, argue some.
Johnsen insists that much of the oil money is being spent at home, citing for example an increase of NOK 100 billion (nearly USD 20 billion) earmarked to fund a new National Transport Plan meant to improve roads and rail systems. But the amount used is, with some exceptions during the finance crisis, limited to 4 percent of the size of the oil fund. Using any more can set off inflation, experts fear.
“We have garnered international praise for how we have managed our oil income,” Johnsen stressed. “Experience from the finance crisis shows how important it is to maintain order in our own home.”
Johnsen claimed that Norway is using more of its oil revenues than most people realize. “It becomes a question of how we shall use money over the state budget, what we shall prioritize,” Johnsen said.
Norway struck oil in the North Sea in 1969, and by 1974, political discussions were underway to save much of the money for future generations. The State Petroleum Fund, as it was first called, was set up in 1990 and now amounts to more than NOK 3,000 billion, making it the second-largest sovereign wealth fund in the world.