Download Document

Government Pension Fund – Global
London, May 2008
Martin Skancke
Director General
Asset Management Department
1
Norwegian Ministry of Finance
The petroleum sector in relation to the
Norwegian economy
25 %
38 %
The petroleum sector’s The petroleum sector’s
share of GDP
share of state revenues
Source: Statistics Norway, Ministry of Finance
2
24 %
51 %
The petroleum sector’s The petroleum sector’s
share of total investments share of total exports
Norwegian Ministry of Finance
The Fund mechanism – integrated with fiscal policy
Revenues
Return on fund investments
Petroleum
revenues
Fund
Transfer to
finance non-oil
budget deficit
Fiscal policy guideline
(over time spend real return of the fund,
estimated at 4%)
3
State
Budget
Expenditures
Norwegian Ministry of Finance
Norway’s fund: Function
•
The Norwegian fund USD 375bn and growing:
a tool for
 long-term wealth management
 short and medium term stabilization



4
Integrated with fiscal budget
Invested only abroad
Transparency
Norwegian Ministry of Finance
Pension Fund - Global Governance Structure
Founded on Act, regulations and separate contracts
Legislator
 Pension
Fund Act
Principal
 Performance reports and strategic changes
reported in National Budgets and National
Accounts
Ministry of Finance
 Regulations
Manager
 Management
agreement
Central Bank
(NBIM)
5
Office of the
Auditor General
Norwegian Parliament
 Advisory / consultancy
agreement
Advisors
 Performance
reports
Norges
Bank Audit
Norwegian Ministry of Finance
Norway’s fund: Key features





6
Aim: Maximize financial returns
Financial investor with non-strategic holdings.
Separation of roles between owner and
operational manager
High degree of transparency
Ethical guidelines that are transparent and
predictable, based on internationally recognized
standards
Norwegian Ministry of Finance
The value of SWFs
7
•
Free capital movements
 Allow capital exporters to
decouple consumption and current revenues
improve risk/return ratio on savings
 Allow capital importers to
decouple investments and domestic savings
improve productivity through productive investments
•
SWFs may contribute to increased stability in financial
markets

Long time-horizon

No liabilities

Little or no need for liquidity in the short term