Calculations conducted by the newspaper Klassekampen show that the ‘Oil Fund’ will be out of money in approximately 27 years if the increase in oil spending continues at its current pace.
The outgoing chief economist at DNB Markets (and incoming at NHO), Øystein Dørum, has done the math for Klassekampen.
The question of the fund’s longevity was originally posed by the Labor Ministry of Finance in connection to the budget in Parliament, but Jensen refused to answer it.
‘It makes sense to conduct such calculations’, says Arbeiderpartiet’s fiscal spokesperson, Marianne Marthinsen, who believes that Jensen is trying to wriggle away from discomfiture.
‘To argue that such a calculation doesn’t make sense, is an admission that oil spending is completely off course’, said Marthinsen.
Dørum emphasized that mathematics is theoretical:
‘It seems unrealistic that future governments would guide their finances blindly toward the abyss, as such calculations show,’ he said.
But that does not mean such numerical calculations are without value. Dørum has, in fact, also compiled alternative calculations, in which the pace is phased and reduced to half that of the years 2014-2017 (with a real return of 4 per cent).
Yet even with such results, the fund will be emptied within the specified period.
‘This illustrates that fiscal policy should be tightened significantly to preserve the Oil Fund’s capital for future generations,’ stressed the Chief Economist.
Source: NTB scanpix / Norway Today