OSLO Feb 16 Norway runs the risk of becoming
too dependent on money from its $900 billion sovereign wealth
fund even though the government on Thursday recommended a
tightening of spending, the central bank governor said.
Prime Minister Erna Solberg and Finance Minister Siv Jensen
said spending in a normal year should be limited to three
percent of the fund, down from the current four-percent rule, to
take into account lower expected future returns.
Central bank governor Oeystein Olsen said changing the
fiscal rule made sense, but argued in a speech that Norway
should not allow spending to increase from the current eight
percent of non-oil gross domestic product.
"A further escalation of spending from today's levels would
be a daring move, even if the fund itself were to grow," Olsen
"Fiscal policy must be decoupled from financial assets
subject to considerable volatility ... The period of rising
government spending of petroleum revenues should now be over."
Asked if this would mean scrapping the percentage-based
spending rule, Olsen said "yes".
"That's a reasonable interpretation. The rule is no longer
as appropriate as it once was in guiding long-term policy," he
(Reporting by Camilla Knudsen, writing by Terje Solsvik,
editing by Gwladys Fouche)