NORWAY - The Government Pension Fund - Global has increased in value for the second consecutive month to reach just under NOK 2.2trn (€250bn) at the end of April 2009.

Figures from Norges Bank monthly balance sheet showed the value of the fund increased from NOK 2.075trn to 2.196trn in April, the highest level in 2009 after a poor start to the year with a NOK 1.5bn loss in January. (See earlier IPE article: Norway government global falls to NOK2.1trn)

Monthly balance reports from earlier this year showed the value of the Government Pension Fund - Global, a continuation of the former Petroleum Fund that invests Norway's oil revenues in non-Norwegian assets, continued to decline in February to reach a low of NOK 2.035trn, however in March the fund increased by around NOK 400m to NOK 2.075trn. (See earlier IPE article: Norway Global sees value increase in March)

However, the April figures follow confirmation last week by the Ministry of Finance that it had revised its national budget for 2009 to fund further "expansionary policies", to try and limit the impact of the financial crisis and curb unemployment figures.

On 15 May, the Ministry outlined proposals to increase the spending of oil revenues by a further NOK 9.5bn to a total of NOK 130bn in 2009, which it admitted is "NOK 39bn in excess of the estimated return on the Government Pension Fund - Global".

Fiscal policy guidelines in Norway are geared to a gradual increase in the use of petroleum revenues with the aim that the structural non-oil central government budget deficit will correspond to the expected real return, estimated at 4%, on the Government Pension Fund - Global.

However, the guidelines do allow the fiscal policy to be used "actively" to counter fluctuations in the economy and the ministry pointed out in a cyclical downturn "higher spending of oil revenues is justified to stabilise the economy".

Despite the higher spending plans, the revised budget estimated the government pension fund - both the global and Norway sections - will reach NOK 2.49trn by the end of the year, as the fiscal budget and the government pension fund should have a consolidated surplus of NOK 237bn.

The ministry also admitted even if the value of the Government Pension Fund reaches NOK 2.49trn, "the capital in the fund will still be considerably lower than the old age pension obligations under the National Insurance Scheme".

Final first quarter figures for the Government Pension Fund - Global will be published by Norges Bank on 20 May 2009.

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