Økonomiprofessor Steinar Holden challenges the finance minister Siv Jensen in the core of the fiscal rule to use oljepenger.
– If the Government want to hold on to 4 per cent as a guideline for the use of money from its oil wealth, it should come with a different justification than that this is the long-term real returns from the fund, he says.
Holden believes that 4 percent is too high, given the prospect of the return on fixed income instruments and shares.
the State’s oil income is placed in its oil wealth.
For the fiscal for to use oljepenger can the politicians each year to use up to 4 percent of the fund of the state budget.
This will preserve the real value of eternal time. The rule was adopted in 2001.
the Fund has for several years risen so quickly in value that 4 per cent would lead the Norwegian economy over the boiling point.
In the last four statsbudsjettene use has been on the 2,6 -3,0 per cent of the fund.
Growth in its oil wealth has become much lower after oil prices fell from summer 2014. At the same time, the return is in the world’s financial markets is historically low.
In the years waiting for the Ministry of finance that the fund’s value will fall.
Support in the selection
He supports himself on a Mark of selection as the study of the share portion in Oljefondets locations.
the Committee estimated that the fund with the current stake can expect an annual real return of 2.3 percent over the next 30 years.
In the figure for real returns are inflation deducted from the annual percentage return in the ongoing money.
Holden has led a variety of public variety. He is much used as a consultant by the Ministry of finance.
Selection: its oil wealth should buy more shares In the years its oil wealth become larger and larger. In year shrink it by 40 billion. the
Head over in the budget
the Estimate for the long-term return of the fund is important because it leads over to the fiscal rule for the use of oljepenger of the state budget.
the Rule says that only the annual real returns of the fund is to be used.
Or to take a picture of the country: the Growth in the forest to be harvested, but the forest is to be maintained.
the Consequence is that the 4 per cent expected long-term real return means that up to 4 percent of the fund can be used in the fiscal budget each year.
If the expected real return is no longer 4 per cent, is the natural consequence to lower the guideline in the fiscal rule, ” says Holden.
If the guideline for spending to be kept at 4 per cent, it will mean that the state budget eats by the fund and helps to reduce it.
This is in contrary with the notion that the fund will reach the future generations for good, ” says Holden.
Want to change to 3 per cent
Holden goes, therefore, to put its spending in the fiscal rule to 3 percent of the fund.
But also this is somewhat higher than a reasonable estimate of the expected rate of return in its oil wealth, ” he says, and refers to the Mark selection.
He believes this still can be justified because we still have a substantial fortune out in the north Sea in the form of oil in the ground.
Holden writes about this in an article in the upcoming issue of the magazine Samfunnsøkonomen.
Using the 3 per cent now
In 2017-the budget plan the Government is to spend just 3 per cent of its oil wealth.
Holdens proposal therefore means no change in current spending. But for the years to come it may be of great importance.
Current use of oljepenger corresponds to 226 billion from its oil wealth. The current handlingsregel on the 4 per cent that means that the Government could spend almost 300 billion of its oil wealth in 2017.
Holdens proposal lowers thus Jensen’s frame with over 70 billion.
This amount is equal to half of the money to the hospitals in the 2017 budget. There are 10 billion more than all the money to roads and railways.
Developer spending rule is further
But Holden doesn’t stop with the 3 per cent. He will in addition:
- rig the spending rule for a future where the revenue from north Sea drops.
- build into the rule that the income from the fund and from the recovery is uncertain.
the Uncertainty applies to both the long-term earnings and the impact of short-term shocks in the economy, for example in the form of a new financial crisis.
the Proceeds from the boreholes sinking
In the long term, it is reasonable to assume that the effect of lower recovery will dominate.
– the Government must draw up plans for how the rule will be revised when we no longer can expect significant future oil income, says Holden.
Meet the short-term shock
In addition comes the uncertainty of a oljeland have to live with. Holden will have something to go on if Oljefondets value fall.
– We can the risk of a sharp international downturn leads to that both the oil price and the value of its oil wealth falls. We must, therefore, have a margin of safety so that we do not need to cut as much in spending. This margin we obtain ourselves by using less than the expected real return in normal times, ” says Holden.
He will avoid cuts that are painful, both economically and politically. The basic idea of not to prey on the fund is all the time below.
Could end around 2 per cent
Summing up can Holdens new and more advanced handlingsregel cause the rate to use oljepenger is around 2 per cent of the fund with the current aksjenandel.
Transferred to 2017-the budget is the difference between 4 and 2 per cent of the entire 150 billion in handlingsregelens frame.
no Matter is 4 percent neither sustainable or reasonable, he believes.
– If we keep on a guideline of 4 percent, we will quickly be able to get in a situation where we share the fund, ” says Holden.
the Rule of the game
Governor Øystein Olsen took already in årstalen in February 2012, called for lowering the use of oljepenger to 3 per cent of the fund.
the Idea was kverket of then-prime minister Jens Stoltenberg already the same evening.
department of treasury’s argument has all the time been regelens credibility. To politikkregler of this type earn the trust, respect and compliance, they must be fixed over a long time.
A reduction to 3 percent would be able to put the rule in the game. It becomes too easy to change it after the economic and political winds.
the Situation is a different one than for four-five years ago. Then, it was uncertain whether the 4% was a high estimate. Now is 4 per cent in the outer edge of what could be perceived as reasonable. So it should not be. A change now will not put regelens credibility at risk, ” he says.
Ministry answers
the newspaper Aftenposten has asked the Ministry of finance on a comment for the Holdens proposal.
“the Government will in connection with the Perspektivmeldingen, that will be presented in the spring of 2017, come back with a more detailed assessment of the recommendations from Thøgersen-selection. Assessments will also build on the recommendations of the Mark committee about the share portion of the Government pension fund global,” writes state secretary Paal Bjørnestad in an e-mail.
Thøgersen-the committee discussed the implementation of the fiscal rule and levertre its assessment in June of last year.
the IMF will also tighten into
Thursday came The international monetary fund (IMF) with preliminary conclusions after the annual survey of the Norwegian economy.
Which concludes the IMF that handlingsregelens core to use 4 per cent of its oil wealth ” … no longer fits as an operational guideline for budsjettpolitikken, …”.
the IMF writes that a an annual spending of oljepenger of the state budget, which corresponds to around 2.5–3 per cent of its oil wealth ” … is necessary to preserve oil revenues and to meet the long-term challenges of the state budget …”.
the spending rule now says 4 per cent. Jensen proposes to use the 3 per cent in 2017-the budget.
the imf’s advice means that finance minister Siv Jensen can’t continue to increase the use of oljepenger, calculated as a percentage of its oil wealth.
she has made in the last three years. However, as the IMF advises, is the end of this.
instead, she may be forced to cut.
How long can the state be cushions when oil revenues fail? | Ola Storeng its oil wealth from 0 to 7000 billion. in the two decades Siv Jensen’s own ekspertutvalg asks her to spend a lot less oljepenger
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