Enable Javascript in your browser for an improved experience of regjeringen.no

Historical archive

Norway’s position in the debate on Sovereign Wealth Funds

Historical archive

Published under: Stoltenberg's 2nd Government

Publisher Ministry of Finance

The international debate has revealed some scepticism towards Sovereign Wealth Funds (SWF). Norway’s Government Pension Fund – Global is a tool to manage our petroleum wealth wisely and avoid the “resource curse”. From this it follows that the Fund is large and that it is invested overseas. A sensible management of oil-producing countries’ petroleum wealth in well-functioning financial markets is in everyone’s interest.

The international debate has revealed some scepticism towards Sovereign Wealth Funds (SWF), where key concerns relate to a lack of transparency and possible non-financial objectives for the investments. Some are calling for measures to address these concerns.

More background information

Norway’s Government Pension Fund – Global is a tool to manage our petroleum wealth wisely and avoid the “resource curse”. From this it follows that the Fund is large and that it is invested overseas. A sensible management of oil-producing countries’ petroleum wealth in well-functioning financial markets is in everyone’s interest.

Well-functioning international financial markets are mutually beneficial as they give capital importers the opportunity to finance productive investments without reducing current consumption, and capital exporters the chance to smooth consumption over time and achieve higher risk-adjusted returns. Apart from restrictions applying to very limited cases concerning national security, we must respect freedom of investment and equal treatment of shareholders as a fundamental principle. The declaration from the G8-summit on 7 June 2007 expressed what would seem to be a sound principle: “...we remain committed to minimize any national restrictions on foreign investment. Such restrictions should apply to very limited cases which primarily concern national security.”

A debate on SWF should also reflect these funds’ potential to positively influence international financial markets through enhancing market liquidity and financial resource allocation. Typical characteristics of SWF are long investment horizons, no leverage and no claims for the imminent withdrawal of funds. Hence, SWF have a strong risk-bearing capacity and an ability to accommodate short-term volatility. They may therefore act as a stabilizing factor in financial markets by dampening asset price volatility and lowering liquidity risk premia.

In relation to the current debate on SWF, the management of the Government Pension Fund – Global is often cited as an example to be followed. Key factors in the management of the Fund include a high degree of transparency in all aspects of its purpose and operation, the Fund’s role as a financial investor with non-strategic holdings, an explicit aim to maximise financial returns, and clear lines of responsibility between political authorities and the operational management. The management aims for international best practice, and the exercise of ownership rights is based on internationally accepted principles such as the UN Global Compact and the OECD Guidelines of Corporate Governance and for Multinational Enterprises.

Transparency is emphasized as a key tool in building trust, both domestically and internationally. Domestically it helps build public support and trust in the management of Norway’s sovereign wealth. Furthermore, openness about the fund management can contribute to stable international financial markets, as well as exert a disciplinary pressure on the management that improves its quality.

We support the ongoing work in the IMF and the OECD in studying the effects of SWF. Any work on developing a voluntary set of best practices for SWF should be carried out by the IMF, with the collaboration of relevant partners. However, we see no cause for regulations that would restrict the present investment activities of our Fund, or any regulation imposing restrictions on SWF over and above those applying to non-SWF investors.

Go to the top