Should the Oil Fund be managed by others? / News / The Foreigner

Should the Oil Fund be managed by others?. Several leading economists suggest releasing the Norwegian Central Bank from some of its financial responsibilities. The Oil Fund (also known as the State Petroleum Fund) was established in 1990 as a result of debate as what to do with the State’s income from oil, and how it should be managed. It was not until 1996 that the State started to put in capital and in 1998, it started to invest in foreign shares. After its amalgamation with the Benefits Fund in 2006, the Oil Fund became known as the Foreign State Pension Fund.  Time for a change Billions of kroner have been wiped off the value of the oil-fund recently since it first started investing in 1996. The Norwegian Central Bank has been responsible for overseeing its investments. Now, questions are being raised by some financial experts.

oil, fund, pensions, norwegian, central, bank



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Should the Oil Fund be managed by others?

Published on Wednesday, 18th March, 2009 at 00:41 under the news category, by Michael Sandelson   .
Last Updated on 18th March 2009 at 10:09.

Several leading economists suggest releasing the Norwegian Central Bank from some of its financial responsibilities.

Svein Gjedrem: Norwegian Central Bank
Svein Gjedrem: Norwegian Central Bank
Photo: Nancy Bundt


What is the oil fund?

The Oil Fund (also known as the State Petroleum Fund) was established in 1990 as a result of debate as what to do with the State’s income from oil, and how it should be managed. It was not until 1996 that the State started to put in capital and in 1998, it started to invest in foreign shares. After its amalgamation with the Benefits Fund in 2006, the Oil Fund became known as the Foreign State Pension Fund. 

Time for a change

Billions of kroner have been wiped off the value of the oil-fund recently since it first started investing in 1996. The Norwegian Central Bank has been responsible for overseeing its investments. Now, questions are being raised by some financial experts.

According to E24 the chief economist in First Securities, Harald Magnus Andreassen, believes that although it was a good idea to give them responsibility for it in the first place, the Bank’s other tasks make it an unnatural choice to be involved in capital management simultaneously.

“A catastrophe”

If one adds the 633 billion in negative yield that the fund had last year to what they have lost so far in 2009, the figure totals 800 billion kroner. According to the Norwegian Telegram Bureay (NTB), this almost equals an entire state budget. In January, a leading investor characterised how the fund has been managed as

“the largest financial catastrophe ever”, according to Dagsavisen.

The chief economist in DnB Nor Markets, Øystein Dørum, told E24 that

“the time has come to separate the Norwegian Central Bank from the oil-fund, irrespective of last year’s results.”



Published on Wednesday, 18th March, 2009 at 00:41 under the news category, by Michael Sandelson   .
Last updated on 18th March 2009 at 10:09.

This post has the following tags: oil, fund, pensions, norwegian, central, bank.





  
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