4 March 2003

Trouble for Foss after Petroleum Fund losses (Aftenposten)

A NOK 2-4 billion cut in next year’s national budget could be the result of the slump in the Government Petroleum Fund. By the end of the year the Petroleum Fund could be NOK 50-100 billion smaller than Finance Minister Per-Kristian Foss thought it would be as recently as last autumn. On Sunday government ministers will gather to start work on the country’s 2004 budget – with a lot less money at their disposal. Yesterday the Norwegian Central Bank published the Government Petroleum Fund’s 2002 results. A dreadful 2001 was followed by an even worse 2002. In fact, it was the Petroleum Fund’s least successful year so far. Calculated in foreign currency, the Petroleum Fund’s downturn has continued into 2003. The slump in international stock markets could lead to Mr Foss losing a further NOK 2.4 billion from the budget next year. Instead of spending NOK 2 billion more of Norway’s oil wealth, we could be forced to spend less next year.

We are taking chunks out of the Petroleum Fund. This year we will spend NOK 10 billion more than the Fund’s actual return on investment. If Finance Minister Per-Kristian Foss was only allowed to spend the actual return on investment from the Petroleum Fund, rather than its expected return, he would have around NOK 10 billion less to play with in his national budget this year. The rules on spending the country’s oil wealth were introduced by the Labour government led by Jens Stoltenberg in the spring of 2001, and say that governments may spend only the expected return on investment from the Petroleum Fund. The expected return is “fixed” at four per cent.

They disagree fundamentally on the EU, but one thing both supporters and opponents of Norwegian EU membership within the Labour Party do agree on is that there is no reason to have more than one referendum on the issue. Yesterday, the Labour Party appointed a working group that will recommend whether the party should say yes or no to a new application to join the EU at Labour’s annual conference in the spring of 2005. Four opponents of membership have been included in the 11-man working group of party heavyweights – but supporters of EU membership are in the majority.

Labour’s spokesman on the EU, Thorbjørn Jagland, was not asked if he wanted to participate in the party’s new EU working group. But according to party secretary Martin Kolberg this is not something to make a big deal out of. “People are trying to make an issue out of this, where there is none. When we put together an internal working group, we normally invite people from the central committee and local politicians. The MPs who lead our representation on the various parliamentary committees are kept out of these internal bodies,” said Mr Kolberg. The Labour Party yesterday announced the names of those appointed to its new EU working group, which will be chaired by MP Bjarne Håkon Hanssen. In the run-up to the party’s annual conference in 2005, the group will have a major influence on the shape of Labour’s EU debate.

With NOK 5 billion in cash and short-term interest-bearing receivables, Aker Kværner has not had so much money in the bank since 1993. But it is probably just as well. Not only are Aker Kværner’s coffers more well-filled than at any point in the past ten years, its financial results for 2002 were the best for five years. But neither of these factors was enough to impress the stock market. The weak state of the world economy means that Aker Kværner is under threat from several quarters. Cash deposits amounting to NOK 4,924 million will therefore come in handy when a NOK 4 billion loan falls due in the autumn of 2004.

Half of Aker Kværner’s NOK 1 billion profits for last year stem from the re-allocation of provisions the company set aside after the European Commission imposed a fine amounting to almost NOK 500 million on the Kværner Warnow shipyard. The fine was imposed in response to alleged breaches of the capacity limits that the EU had imposed on the shipyard. The fine is still the subject of legal wrangling in the courts. Aker Kværner’s chief executive Helge Lund was a happy man yesterday when he announced the company’s 2002 financial results. He boasted that the company was in a position to present its best results for five years, and in a difficult market too. Last year Aker Kværner achieved a pre-tax profit of just over NOK 1 billion, compared with a loss of almost NOK 5 billion the year before.

Norsk Hydro paid its chief executive, Eivind Reiten, NOK 4.8 million in salary last year – NOK 1.2 million more than the year before. Mr Reiten’s basic salary rose by 15 per cent. In addition, he was paid a bonus of NOK 630,000. Mr Reiten’s bonus bonanza continues this year. While his basic salary remains the same, Mr Reiten’s bonus prospects are significantly better. If he makes his full bonus entitlement, he could end up with as much as NOK 6.3 million in his pocket. The unions are furious.

Last year the Government Petroleum Fund handed out 12 new contracts to manage the investment of the country’s oil revenues. None of the contracts was awarded to a Norwegian fund manager. The Norwegian financial services sector is now completely out of the Government Petroleum Fund.
(Aftenposten)




NOK 130 billion in government oil revenues evaporated in foreign stock markets last year. The Socialist Left Party, Centre Party and Progress Party want to inject several billion into the Norwegian economy to bring down the unemployment rate.
(Dagsavisen)




The Government Petroleum Fund lost NOK 83 billion last year because it invested in shares instead of bonds. The Progress Party’s Siv Jensen now wants a review of the investment guidelines followed by the Norwegian Central Bank, which administers the Fund.
(Klassekampen)




High flour prices and low import duties now make it more profitable to ship bread all the way from Italy and France. Over the past four years, the volume of bakery products imported to this country has doubled, and the market is growing. Traditional Norwegian brown bread is losing ground to croissants and French loaves.
(Aftenposten)




Founder and former Sponsor Service chief executive Terje Bogen does not trust the competence of the financial troubleshooters who have written down assets and sent the company to the bankruptcy court. He has hired two of the country’s best legal experts to clear his name.
(Aftenposten)




The Progress Party, Labour Party and Socialist Left Party are thinking of joining forces in an effort to reduce unemployment. Together they form a majority in the Storting and can override the Government.
(Dagsavisen)




Support for the Christian Democratic Party slips one percentage point on Norsk Gallup’s March tracker poll. The party, one of the three ruling coalition parties, has never had such little support among the voters.
(Verdens Gang)




Internet banking in Norway has grown significantly in popularity over the past year, according to a survey carried out by the Norwegian Savings Banks’ Association. Around 1.65 million people now use internet banking services, an increase of around 350,000 compared with last year. All in all, 47 per cent of bank customers use internet banking services, compared with 36 per cent last year.
(Aftenposten)




It might be appropriate to hold a referendum on the future of the established church in Norway, the Church of Norway, in 2006. “We will fight any vote on the status of the Church of Norway. Human rights are not something to be voted on,” said Lars Gule of the Norwegian Humanist Association.
(Klassekampen)




Last year Norwegians paid over 50 per cent more for funeral services than they did four years previously. During the first six months of 1998, Norwegians spent NOK 247 million on funeral, crematorium and cemetery expenses, according to figures released by Statistics Norway. By 2002 that figure had risen to NOK 381 million.
(Vårt Land)

Yesterday, the Labour Party’s central committee fired the opening shot in a new EU debate. The party has appointed a working group to prepare its position in the run-up to the 2005 general election. Let us hope for the EU membership issue’s sake that this will not turn out to be another shot in the foot this time. The working group is a mixture of supporters and opponents of EU membership, and those who have not yet made up their minds. It is unlikely they will arrive at a unified conclusion. But they should be able to agree on procedural issues and a timetable. Historically, Norway’s EU debate resembles a Thirty Years War, in which opponents of Norwegian membership have won the majority of battles – at least the referenda. For its part, Labour has lost both voters and government office because of its support for EU membership. Two of the party’s best post-war leaders, Trygve Bratteli and Gro Harlem Brundtland, saw their authority weakened after losing in the two referenda so far. Against this gloomy backdrop it is easy to understand why many Labour activists are in no hurry to restart the debate. In our opinion, the Labour Party should make haste slowly when it comes to EU membership. The party will arrive in time all the same. Many people perceive today’s EEA Agreement to be a exercise in political serfdom. But people do not like to be driven too hard. If the next referendum is to end in victory for EU membership, the parties are going to have to put away the whip they have used on previous occasions, and dangle a few carrots in front of the electorate instead.