Managing oil wealth through Norges Bank and the Government Pension Fund Global

Norway's long-run fiscal and current-account charts look unusually stable for a major oil exporter because, since 1990, the country has systematically diverted petroleum revenue into the Government Pension Fund Global rather than spending it domestically. The fund began as a deposit account at Norges Bank following a 1983 proposal from a committee led by former central bank governor Hermod Skånland, and it is still managed by Norges Bank Investment Management, the central bank's asset-management arm, investing abroad in thousands of companies across roughly seventy countries rather than inside the Norwegian economy itself. Less than half of the fund's current value even comes from oil and gas deposits; the rest has been generated through investment returns on equities, bonds, real estate and infrastructure. Governor Øystein Olsen has described this structure as the deliberate separation of Norway's petroleum wealth from its day-to-day public finances, which is why Norway's spending and output did not simply track the oil price upward through the 2000s boom and why its sovereign balance sheet still strengthened even during the price collapses of 2008 and 2014-16.