The Treaty states that for two years before the examination the national currency is to have been inside the normal fluctuation margins provided for by the Exchange Rate Mechanism (ERM). The process by which the initial group of participants was selected suggests that the criterion could be interpreted somewhat more freely. Finland and Italy were both approved in May 1998 even though their currencies had then been participating in the ERM for only around eighteen months. The other countries may also have reasons for not insisting too strongly on a strict interpretation of formal participation by outsider countries. Considering the apparent strength of British opposition to a fixed exchange rate arrangement, such an attitude might obstruct a British membership of the euro area. It seems to me that in this respect the United Kingdom is in a more difficult position than Sweden. Our Government and the Riksdag have stated that participation in ERM II can be seen as a direct preparation for joining the monetary union; the Riksbank has noted that we do not see any problems with that. In a future situation where a referendum or a general election has resulted in a positive attitude to the monetary union, it is difficult to envisage Sweden’s participation in ERM II as posing any major political problems. Regardless of the formal requirements that may apply at the time of the examination, the assessments in May 1998 indicate that a central factor in the evaluation will be how the exchange rate has actually developed.
Of particular interest is that Indian actors are providing fresh interpretations of Ibsen’s work, both in India and in Norway. The topic of my speech today is Norwegian experiences in balancing economic development with macroeconomic stability from a historical perspective. As a background for the subject, let me start with a brief characteristic of Norway today from an economic perspective. First, Norway is a small, mountainous country with a population of only 4½ million people scattered across a land area that is one tenth of the size of India. Second, Norway’s economic growth has been favourable for many years, and the per capita income is among the highest in the world. An abundance of natural resources, not least oil and gas, and openness to trade and capital movements are important reasons for this. The petroleum sector’s share of GDP was approximately 24 per cent in 2005. Over the last 10 years, the government has earned higher petroleum revenues than it has spent. Today we have a sizeable Government Pension Fund, which invests all its funds globally. Globalisation and cyclical developments have been kind to the Norwegian economy. Prices for our imported goods are falling in relation to prices for goods we export. Norway’s terms of trade are improving. The impact of the rise in oil and gas prices is particularly strong, but the terms-of-trade gains for the mainland economy have also been high. One aspect of this is that trade in services with India is increasing.