The Ministry of Finance made the first capital transfer to the fund in 1996. Since then, the government’s net cash flow from petroleum activities has been transferred to the fund each year. The sovereign wealth fund has a long investment horizon, and is amongst other things intended to be managed so that Norway’s petroleum wealth benefits future generations as well.
For the second time, it was a net outflow of the funds capital to the government in 2017. The government spending, less net cash flow from petroleum activities, was NOK 61 billion in 2017. By comparison, it was a net outflow in 2016 of NOK 101 billion, and the fund received NOK 42 billion of net inflow from the government in 2015.
At year end, the fund’s market value was NOK 8 488 billion. This corresponds to more than two and a half of Norway’s GDP and over NOK 1.6 million per registered person in Norway at year end. Since the start, the fund has received NOK 3 337 billion from petroleum activities, and the cumulative return from investments in equities, fixed income bonds and real estate was NOK 4 151 billion at year end.
The market value to the Government Pension Fund Global, 1996-2017
Source: Statistics Norway, NBIM
Petroleum revenues are phased into the economy gradually in accordance with the fiscal rule that over time, government spending must not use any of the fund’s capital, only its expected real return – currently estimated to 3 %. The fiscal rule also provides for petroleum revenue spending to be increased in economic downturns and decreased in economic upturns.
This ensures that petroleum revenues help to smooth fluctuations in the economy and ensure good utilisation of capacity and low unemployment. It contributes to a high level of economic stability and predictability, which is very important for decision-makers and for society as a whole. Provided that the fiscal rule is followed, the fund’s capital will not be depleted over time, and future generations will also be able to benefit from Norway’s petroleum wealth.