NORWAY – The Norwegian central bank says the existence of the Petroleum Fund may be influencing Norwegians’ saving behaviour.
When oil is extracted and sold, natural assets are transformed into financial wealth, deputy governor Jarle Bergo said in a speech today.
“As long as this financial wealth continues to grow, it will appear as government saving in the accounts, while it is in reality a conversion of wealth. In this sense, we are not saving so much more than we used to.”
He added: “When households see that the state, which has undertaken substantial pension obligations, puts money aside, some may perceive this as a guarantee for their own pensions. This may influence their own private saving decisions.”
He was speaking on ‘Household saving and the economic outlook’ in Oslo today.
Bergo said that the value of the Petroleum Fund, measured as a percentage of GDP, would rise in the years ahead. Despite this, the return on the fund “can only cover a small portion of higher pension expenditure”.
But sustained higher oil prices the funding requirement would be “somewhat lower” he told xx. “To base decisions on this, however, would be a very risky strategy.”
“If we succeed in reducing the growth in pension expenditure by modernising the national insurance system and introducing other reforms, this will be an important step towards addressing the fiscal challenges facing us.”
Last week the Norwegian Ministry of Finance set up a seven-member investment strategy advisory body for the state Petroleum Fund.