Petroleum Fund €5bn lower than estimated
NORWAY – The Petroleum Fund was NOK42bn (€5.2bn) smaller at the end of last year than originally estimated by the government.
“At the end of 2004, the market value of the Government Petroleum Fund was NOK1,011bn, about NOK42bn lower than estimated in the National Budget 2005,” the Ministry of Finance stated today in the revised 2005 budget.
The original budget, released in October, had expected the fund to grow to NOK1,053bn by the end of 2004.
The government now expects the fund to increase to around NOK1,300bn by the end of 2005 – up from an earlier estimate of NOK1,244bn.
The fund’s size is regularly smaller than government estimates. It was expected to grow to NOK857bn by the end of 2003, but missed this by NOK10bn. And its year-end size in 2002 was “significantly lower” than estimated.
Despite not meeting government estimates, the fund does beats its benchmark – for example by 0.53 and 0.59 points in 2004 and 2003 respectively.
The fund is catching up on the world’s largest pension funds, the California Public Employees’ Retirement System in the US and Dutch civil service scheme Stichting Pensioenfonds ABP.
“The Petroleum Fund has become large, even compared with the largest funds internationally,” the fund said in its annual report in March.
The finance ministry also said today that, in the current phase of the business cycle, the gap between the use of petroleum revenues and the real return on the fund “should be narrowed”.
It said the excess spending compared to the expected return of the fund was expected to be NOK25bn. A non-oil budget deficit estimated at NOK74.2bn would be covered by a transfer from the fund.
The Petroleum Fund releases its first-quarter report next week.