Arnason, Birgir and David Ordoobadi, 1996, “Norway’s Long-Term Fiscal Challenge,” in IMF Norway—Background Paper, SM/96/17, January, (Washington: International Monetary Fund).
Ordoobadi, David, 1996, “Norway’s State Petroleum Fund,” in IMF Norway—Background Paper, SM/96/17, January, (Washington: International Monetary Fund).
Tersman, Gunnar, 1991, “Oil, National Wealth, and Current and Future Consumption Possibilities,” IMF Working Paper 91/60, (Washington: International Monetary Fund).
Prepared by Natalia Koliadina.
The lower figure is for relative wage rates in manufacturing industry, while the higher figure is for relative unit labor costs. Developments in Norway’s international competitiveness are summarized in a companion background paper on the wage determination system.
The agreement is intended to avert climate changes caused by increasing carbon dioxide emissions. It is likely that the need to reduce emissions would require a reduction in the world consumption of fossil fuels, which, in turn, would affect producer prices of crude oil. The oil price projections used in Norway’s 1998 budget reflected the assumption that stabilizing carbon dioxide emissions at the 1990 level would reduce oil prices by 15–20 percent in real terms by 2010.
The scenarios implicitly assume that the increase in health care spending after 2010, caused by demographic trends, will be offset by an increase in taxes paid by pensioners.
Underlying expenditure is equal to total fiscal expenditure minus spending on petroleum activities, unemployment benefits, interest payments, support to shipyards, and refugees. The excluded categories presently account for about 12 percent of fiscal expenditure.
Before the funds are transferred to the SPF, they are kept in the deposit account of the government with Norges Bank with an annual interest rate of 3¾ percent, which is reported as interest earnings in the budget.