Scraping the bottom of the oil barrel? / News / The Foreigner

Scraping the bottom of the oil barrel?. Billions disappear down financial well in first quarter. The managing director of the oil fund – also known as the Foreign State Pension Fund – Yngve Slyngstad, has probably had better starts to his year than this one has been. 243 billion kroner has been wiped off the value of the fund in the first quarter of 2009. And whilst the value of it has been falling, the level of criticism as to how it has been managed has been rising. The financial crisis strikes again To put it mildly, a drop in value from 2,275 billion kroner at the end of last year to 2,076 billion is no small sum. According to Dagens Næringsliv (dn.no), the loss can be attributed mainly to the changing pattern of foreign exchange rates, rather than the fund’s bad management. The strong krone was responsible for 177 billion of the loss, whilst bad management took care of the rest. Shares and bonds

state, pension, fund, abroad, oil, shares, defecit, profit, norway



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Scraping the bottom of the oil barrel?

Published on Thursday, 21st May, 2009 at 23:27 under the news category, by Michael Sandelson   .
Last Updated on 22nd May 2009 at 11:32.

Billions disappear down financial well in first quarter.

Sink
Sink
Photo: TsR/Shutterstock Images


The managing director of the oil fund – also known as the Foreign State Pension Fund – Yngve Slyngstad, has probably had better starts to his year than this one has been. 243 billion kroner has been wiped off the value of the fund in the first quarter of 2009. And whilst the value of it has been falling, the level of criticism as to how it has been managed has been rising.

The financial crisis strikes again

To put it mildly, a drop in value from 2,275 billion kroner at the end of last year to 2,076 billion is no small sum. According to Dagens Næringsliv (dn.no), the loss can be attributed mainly to the changing pattern of foreign exchange rates, rather than the fund’s bad management. The strong krone was responsible for 177 billion of the loss, whilst bad management took care of the rest.

Shares and bonds

The year’s first quarter has also seen the lowest sum transferred by the Department of Finance to the oil fund since 2004; just 44 billion. According to E24.no who were present at a press conference that was held on Wednesday, the reduction is due to the combination of a lower oil price, and a higher spending over and above the national budget. The government’s contribution to the Foreign State Pension Fund has, consequently, been cut by two-thirds in comparison to last year. Government bonds are now being sold in favour of buying shares, with 134 billion having been spent so far. 

“We sold bonds for 90 billion kroner in the first quarter”, Slyngstad told E24.no on Wednesday after the conference.

The sale of bonds comes on top of the Norwegian parliament’s decision in 2007 to raise the level of shares bought by the fund from 40 to 60, writes the paper.

Optimism

Although Slyngstad goes on to say that

“in 10 years, we will know if this has been a good buy”

(which may not sound particularly encouraging to some), he was optimistic about what is happening at the moment, because of the way the shares have been managed. This has contributed to producing higher profits.

“We are now seeing a substantial return” he said at the conference.

Maybe the pipe down which money has been disappearing has now been pigged?



Published on Thursday, 21st May, 2009 at 23:27 under the news category, by Michael Sandelson   .
Last updated on 22nd May 2009 at 11:32.

This post has the following tags: state, pension, fund, abroad, oil, shares, defecit, profit, norway.





  
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