Norway resists using its oil money

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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.

Finance Minister Sigbjørn Johnsen is once again defending Norway's limited use of its oil revenues. PHOTO: regjeringen.no

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.

Views and News from Norway/Nina Berglund
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  • Loren Rich

    That makes no sense at all? You can be prudent and still spend on infrastructure that future generations will benefit from too. Johnsen makes no sense. It must be just like the US where the bankers who make huge fees off invested money call all the shots.
    Why enrich bankers instead of using the money for current and future Norwegians?
    Use some common sense!

  • Rob

    By the time the future generations get to spend some of this money Norway will have crumbled away, if the level of neglect is kept up the cost to rebuild will eat up everything in the pot.

  • Akiba

    They started to put aside the oil money some 40 years ago! That was the past. Isn’t today the yesterday’s future? C’mon guys, wake up! That is just so ridiculous, like a whole lot of other things in Norway.

  • roop

    You don’t want to leave your “house” to your children when it’s all falling apart and about to collapse, do you? It’s an embarrasment to all, the the state of the Norwegian infrastructure. I don’t know of one person that I have talked to that isn’t fed up to the back teeth of these arrogant political views.

  • Sam

    What a messed up country. It is falling apart, they have the money to fix it, and they don’t. I’m glad I worked on a lot of black jobs, enough to get an apartment in Spain, cos when my kids leave home, I am out of this communist pathetic crap hole. My car just failed it’s EU Control, all 4 shock absorbers, thanks to Norways shitty roads. Tomorrow, 17th Mai, I will light a cigar with a Norwegian flag.

  • Matt

    Agree with everyone here. Walking around Central Oslo over Easter this year gave me shivers. Have visited often over the last two and a half years form London and can honestly say the place has got far worse. What’s with all the graffiti? I was at a BBQ in Kristiansand and two teachers who work in Oslo agreed Norwegian politicians take voters for granted and are very arrogant!

    • McKenzie

      I feel compelled to comment just to show that there are some sane readers of this newspaper.
      I am amazed at all of you;
      If Norway invests a lot of money in snazzy infrastructure today, not only will it have less money in the future to pay for the maintenance, but the maintenance will be much more expensive (high speed rail maintenance, making all the roads smooth and perfect after every winter’s damage)

      If Norway spends more money than it already does, inflation would increase significantly. The country is already looking at a growing real estate market bubble, wages are extremely high, and prices are very high. Each additional kroner spent, the less value the country gets in return because of inflation. The labor market is looking at 2-3% unemployment, so it’s not like many new jobs could be created without getting rid of old ones.
      By using only the interest paid on the fund each year, the government can permanently expand its budget forever, for all future Norwegians.
      I thought trolls were mythical Norwegian creatures, but my fellow commenters, you have proved that they really do exist.

  • Neil

    There is nothing “snazzy” about building a road that lasts more than a year and that’s actually wide enough to fit traffic onto.
    Given that your opinion is contrary to that of every other commenter I consider that you’re in fact the troll here. I will not feed you.