Norway, which holds legislative elections on Monday, has one of the world’s largest sovereign wealth funds, with colossal savings of about $ 1.4 trillion (€ 1.2 trillion) that politicians have to use sparingly.
– How did a country with 5.4 million inhabitants get so rich?
To explain it through the fable of Aesop, being more ant than cicada, that is to say, more foresighted than spender. North Sea oil is perceived in Norway as an almost providential manna that belongs to all Norwegians, including future generations. If it is exploited today, it is to transform this oil rent into financial revenue that can last, even when the planet has finished with fossil fuels.
The fund, whose official name is “Global Government Pension Fund”, was created in 1990 but it took until May 1996 for the government to inject it with a modest check for NOK 1,981 million (less than US $ 305 million in The time). It currently receives all the public oil revenues: taxes, profits from the participation directly in the hands of the State in hydrocarbon deposits and dividends paid by Equinor, a 67% public company.
– Is it an “open bar” for the political class?
Not at all. In 2001, Norway decided that the fund could be used for budgetary purposes, but within a well-defined framework. The government is only allowed to use the estimated return on the fund, without touching the capital, which must remain intact.
Initially set at 4%, the estimated return was cut in 2017 to 3% with the support of most political parties because that figure (obtained by discounting inflation and management costs) is considered more realistic for future performance of the companies. financial investments. So far, the fund has an average annual net income of 4.6%.
Since 2016, the government has withdrawn more than it deposits as a result of falling oil revenues. Norway has stopped saving but the fund continues to grow as the returns on its investments exceed the money withdrawn by politicians.
In an exceptional period, such as this year due to the covid-19 pandemic, the State was authorized to deviate a bit from the rules as long as it returns to them when the situation normalizes. In this way, the government plans to withdraw 3.7% of the value of the fund in 2021, that is, about 46,000 million dollars (about 39,000 million euros).
– How to manage so much money?
It is the Central Bank of Norway who is in charge of managing the fund, invested mainly in shares (72.4% at the end of the second quarter). With stakes in nearly 9,000 groups, it controls an average of almost 1.5% of every listed company in the world.
It also has many obligations (25.1% of its portfolio) and, to a lesser extent, investments in the real estate sector (2.4% of assets). For some time, it has also invested in renewable energy projects that are not listed on the stock exchange.
All these investments are made outside of Norway to avoid destabilization of the national economy.
They respond to ethical rules dictated by the Ministry of Finance. For example, companies guilty of serious human rights violations or serious damage to the environment, manufacturers of “particularly inhumane” weapons, tobacco producers or companies that obtain part of their activity from coal mining are prohibited.
For this reason, dozens of groups, such as the giants of the aeronautical industry Airbus and Boeing, the tobacco company British American Tobacco or the mining company Vale, are deprived of their investments, and others are under observation.
phy / nzg / mar / erl