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Sovereign Wealth Fund: Norway

Sustaining wealth for future generations through Norway's oil surplus (1990–ongoing)

April 11, 2024
Author: Paula Sevilla Núñez

In the 1990s, Norway’s Government Pension Fund Global was established to shield the economy from the fluctuations in oil prices. Surplus revenues from the country’s oil and gas sector are transferred to the fund and invested in more than 9,300 companies in seventy countries. It therefore serves as a mechanism for long-term saving, and to finance future pension liabilities. 

Norway’s Government Pension Fund Global (GPFG) was set up to ensure the sustainable use of revenues from the oil and gas sector. All surplus revenue from oil production in the country is transferred to the Fund, and invested in equities, fixed income, real estate, and renewable energy infrastructure. The Fund is only invested abroad, to prevent it from distorting the Norwegian economy, and investments are spread across different markets, countries and currencies to diversify risk.1 The deposits from oil and gas production account for less than half the value of the fund, with the remainder originating from the earnings from the investments.2 

Each year, the government is only allowed to spend the equivalent of the real return on the fund, estimated at 3 percent.3 Whenever there is a deficit in the government’s budget, it is covered with money from the fund, while any surpluses are transferred to the fund, to ensure the government’s ability to spend more in times of crisis.4

The Ministry of Finance determines the strategy of investment—any major change must be approved by Parliament—while the Central Bank (Norges Bank) is responsible for its operational management. An independent Council on Ethics conducts ethical evaluations of any company before investment takes place, and provides recommendations to Norges Bank on any company that should be excluded for ethical considerations.5


Following the discovery of oil off Norway in 1969, there was general political consensus on developing a mechanism to manage the revenues sustainably and shelter the country’s economy from the volatility of oil prices. The Tempo Committee, a group of experts appointed by the government, proposed in 1983 the creation of a sovereign wealth fund to invest oil revenues.6 Legislation to create such a fund was passed in 1990, and the funds were first deposited in 1996. In 2001, a new law set a limit on the amount that could be spent from the fund to be 4 percent of the yearly return of the fund’s investments. This was reduced to 3 percent in 2017.7 In 2022, the government updated the terms of the fund to divest from companies associated with climate risks and invest in those aligned with the goal of net-zero emissions by 2050.8


The annual return of the fund has remained at around 5.7 percent since 1998.9 In 2022, the fund’s value was about USD 1.2 trillion,10 or about USD 250,000 per Norwegian citizen. Its 2022 management costs amounted to about USD 490 million, 0.044 percent of assets.11


The GPFG is one of the world’s largest funds and owns about 1.5 percent of all shares in the world’s listed companies.12 The GFPG usually funds around 20 percent of the country’s fiscal budget, and contributes to Norway’s public spending being the highest in the OECD at around 65 percent of gross domestic product (GDP) in 2020—about 20 percent of GDP on social protection and 6.2 percent on health (compared to the OECD’s average of 13.3 and 7.9 percent).13 Such expenditures have contributed to Norway’s Human Development Index consistently ranking among the highest in the world,14 and in 2020 levels of citizen satisfaction with public services above 90 percent in surveys.15

The Fund’s revenues have allowed Norway to increase its spending in times of economic downturn, such as during the COVID-19 pandemic.16 In the aftermath of the conflict in Ukraine, the fund also allowed the government to increase expenditures by around NOK 100 billion (USD 9.3 billion) for national insurance scheme payments, receiving and integrating refugees, and the continuation of the electricity subsidy scheme. 17

Oil and gas sea platform in Norway. ©Adobe Stock/h368k742