Norway: Investing oil revenues abroad

Since 1996, the government of Norway has transferred oil related fiscal surpluses (averaging 5% of gdp anually) to the state petroleum fund (s.p.f), which invests solely in foreign securities; mainly as a result of this policy Norway's net external assests have increased from 3.7% of g.d.p in 1996 to an estimated 17.2% of g.d.p in 2000.The spf plays an important role in moderating real appreciation of the krone (Norwegian currency). The s.p.f also helps smooth out the fluctuations in oil revenues. The fund is designed to absorb today's budget surpluses fuelled by Norway's oil and gas, in order to help the aging population when the oil wells run dry.

Norges bank which manages the fund has delegated the funds management to different institutions. Mercury Asset Management handles the U.K portofolio. Capital International, Gartmore Investment Management and Storebrand Kapitforvaltning jointly manage non-U.K European equities. While Fidelity Pensions Management oversees the non-Japanese Pacific Rim portofolio.