Over the next few years, the return on the Pension Fund is expected to rise roughly in line with government expenditure on retirement pensions through the national insurance scheme. Revenues from petroleum activities will nonetheless gradually decline, pulling down growth in the Fund. Over time, therefore, the national insurance scheme’s retirement pensions will grow considerably faster than the expected real return on the Fund. (See Chart: Generational account.) However, it is wrong simply to compare the Pension Fund and obligations under the national insurance scheme. The government has the option of taxing households and businesses, and this naturally also has a considerable net present value. Generational accounts allow for this. These accounts show whether there is a need to raise taxes or lower expenditure for the government budget to balance in the long term, based on forecasts for benefit and pension payments and oil revenues. The generational accounts reveal that there is currently a need for fiscal tightening equivalent to 10 per cent of GDP or of the order of NOK 200 billion. Longterm forecasts from the Ministry of Finance, that also take the pension reform into account, show a shortfall of around 6 per cent of mainland GDP. Calculations by professors Alf Erling Risa and Erling Vårdal here in Bergen paint a similar picture. The need for fiscal tightening roughly corresponds to current spending of oil revenues. Estimates of this kind are highly  16  Revised National Budget 2010.
On 2 May, agreement was reached between Greece, the IMF and the other euro area countries on a three-year loan package with a maximum limit of EUR 110 billion. The agreement included a comprehensive IMF adjustment program. Greece has borrowed approximately EUR 30 billion from the IMF and the euro area countries since May. Other European countries with weak public finances were also being scrutinised and there was a risk of contagion to the banking system in Europe, which was behind many of the loans. On 10 May the EU and the European Central Bank announced extensive support measures for EU countries, including the European Financial Stability Facility, which can provide loans to countries in difficulty up to a total limit of EUR 500 billion, with additional loans of up to EUR 250 billion made available by the IMF through its program facilities. Countries may draw on these loan facilities provided that taxes are increased and expenditure cut so as to enable the country to gradually become self-supporting. At the same time, the European Central Bank began to buy government bonds, which had become difficult to trade on the market, enabling markets and monetary policy to function more effectively. Economic history shows that periods of surging corporate and household debt and sharply rising property prices often precede banking crises. The fates of banks and states are inextricably linked. Banking crises usually lead to fiscal crises. Similarly, weak government finances will undermine banks’ financial position. 1 Crises are costly.