The chart shows the share of the central government’s net cash flow from petroleum activities that has been transferred to the Petroleum Fund. The Ministry of Finance first transferred capital to the Fund in May 1996. Since then, the central government accounts have shown a surplus each year and capital equivalent to the surplus has been transferred to the Fund. In 2000 and 2001, almost the entire cash flow was transferred to the Fund, while in the last two years the share transferred to the Fund represented about two thirds of the cash flow. The Petroleum Fund has become large, even compared with the biggest funds in the world. At end-2004, the market value of the Petroleum Fund’s international portfolio was 1 016 billion Norwegian kroner or 124 billion euros. The Ministry of Finance has defined a clear mandate for Norges Bank’s management of the Petroleum Fund. Norges Bank shall seek to achieve an excess return in relation to a benchmark portfolio. Norges Bank has developed principles of corporate governance. For the internally managed assets, Norges Bank has exercised voting rights at the general meetings since the beginning of 2003. The external managers have exercised voting rights for the assets they manage on behalf of the Petroleum Fund since 1999. For that portion of the portfolio that is under internal management, Norges Bank voted at 132 annual meetings on 1 541 items in 2004. Norges Bank voted against the management’s proposal on 18 per cent of the items.
Prior to these periods, the manufacturing sector’s competitive position had weakened. The fiscal rule is useful in that it gives weight to long-term considerations when addressing day-to-day economic policy challenges. The fiscal rule stabilises enterprises’ expectations as to competitiveness and the krone exchange rate. This can prevent abrupt and pronounced swings in the structure of the economy. If the government authorities disregard the rule, enterprises will lose an important reference. A policy rule can make matters worse if economic agents have drawn up long-term plans on a faulty basis.1 The current cost level in the Norwegian business sector is adapted to an expansion of the petroleum sector and a steady phasing-in of petroleum revenues into the mainland economy. Costs rose sharply from the mid-1960s to the mid-1970s and reached a very high level. In subsequent years, costs have varied around this level. After a period, we will be able to cover a smaller share of our imports using current petroleum revenues and drawings on the Petroleum Fund. Competitiveness will then have to be improved – perhaps to around the level prevailing at the end of the 1960s prior to Norway’s emergence as an oil nation.2  The labour market Compared with other European countries, income formation in Norway has been fairly flexible. Wage growth has declined rapidly when unemployment has risen. This is why unemployment has not taken hold at a high level. The favourable results partly reflect the considerations underlying the wage settlements at a centralised level.