Svein Gjedrem: Economic perspectives
Annual address by Mr Svein Gjedrem, Governor of the Norges Bank, at the meeting of the
Supervisory Council of Norges Bank, Gausdal, 15 February 2001.
* * *
Introduction
Norway's economy is today characterised by substantial petroleum revenues, sharp growth in
government expenditure, a tight labour market and high cost inflation. High oil prices and sizeable
petroleum production are contributing to surpluses on the current account and the central government
budget. This has also resulted in a vigorous rise in Norway's disposable income. The current account
surplus in 2000, which was equivalent to about 14 per cent of GDP, is among the highest surpluses
recorded by an OECD country in the post-war period. The total general government budget surplus
also rose sharply, reaching 141⁄2 per cent of GDP.
Surplus as a percentage of GDP and
income growth for Norway
16 Current account balance 16
Public sector
12 12
Disposable income
(growth rates)
8 8
4 4
0 0
-4 -4
1998 1999 2000
With the exception of a brief pause in growth from the summer of 1998, the Norwegian economy has
been expanding since 1993. Employment has risen and unemployment has fallen to just over 3 per
cent. A shortage of labour in many sectors has resulted in a relatively sharp growth in labour costs in
Norway.
Employment growth
Per cent
Whereas the upturn was balanced for a long period, the public sector has laid claim to a large share of
the increase in the labour supply in recent years. Manufacturing employment has fallen markedly since
1998.
The mainland economy features some aspects that are associated with a boom period, although
growth is low. After several years of mainland GDP growth in the order of 3-4 per cent, activity is now
increasing by less than 2 per cent a year. The economy is operating near capacity limits.
New working time reforms, increased use of sick pay and disability benefits and a reduced supply of
labour from other Nordic countries are restraining growth in many sectors. Moreover, there is no
evidence suggesting that productivity growth in Norway has picked up to the levels in some of our
neighbouring countries.
Risk premia for private companies in the US
Percentage points
6 6
4 4
High risk
Medium risk
2 2
Low risk
0 0
1993 1994 1995 1996 1997 1998 1999 2000 2001
International equity prices declined sharply last autumn. In the US, output and employment are
stagnating. As shown in the chart, the risk premium in capital markets on long-term credit to
enterprises has increased. In addition, many international enterprises now have a poorer credit rating
than earlier This has also affected borrowing in Norwegian companies, which now have to place
greater emphasis on their customers' ability to honour commitments. International financial and capital
markets are characterised by uncertainty and unrest.
This unrest is not found among economic agents in Norway. As long as oil prices are high, the
Norwegian economy is fairly sheltered. Many central banks are now reducing their key rates. As our
economy is affected to a lesser extent, the differential between short rates in Norway and abroad may
widen.
Monetary policy
The long-term objective of monetary policy is to provide the Norwegian economy with a nominal
anchor - domestic price stability, and thereby the basis for a stable krone. Nominal stability is the best
contribution monetary policy can make to economic growth and prosperity. A nominal anchor is also a
necessary precondition for stable financial markets and property markets. High inflation and wide
swings in the exchange rate impair the function of prices as an information vehicle. This leads to
booms followed by busts and an arbitrary redistribution of income and wealth. Inflation therefore
poisons the economy.
By linking movements in the krone to the euro, we have chosen to follow the same standard for
nominal stability in the economy as set by the euro area countries.
Inflation 1990 - 2001
Per cent
5 5
4 4
Norway
3 3
2 2
1 1
Euro area
0 0
1990 1992 1994 1996 1998 2000
Since 1997, inflation has been higher in Norway than in the euro area. The difference partly reflects a
period of strong growth in Norway, while the level of activity in Europe has been low. The higher level
of inflation in Norway cannot be sustained, however, as this would undermine the basis for stability in
the krone exchange rate and confidence in monetary policy.
Short-term capital inflows and outflows are probably the most important factor determining movements
in the krone exchange rate from day to day, from week to week and from one quarter to the next. They
are governed by expectations concerning future returns. Changes in expectations concerning the
future value of the krone can trigger extensive capital movements.
As a rule, Norges Bank does not intervene in foreign exchange markets with a view to influencing the
krone exchange rate. The krone is floating, and the value of the krone fluctuates in periods by the
same magnitude as exchange rates in other open economies. Nevertheless, the prevailing stability of
the krone is largely a reflection of confidence that inflation in Norway will be kept at a low level.
Our experience is that changes in the Norwegian interest rate level only have a predictable effect on
the krone exchange rate when the change in interest rates also contributes to stabilising inflation.
However, the relationship between interest rates and price and cost developments is uncertain. The
setting of interest rates thus requires the use of professional judgement and discretion. The basis for
exercising discretion is subject to limitations, however. Should any doubt arise as to whether the
interest rate is oriented towards nominal stability, this would trigger substantial capital movements.
House prices and real interest rate
after tax
Index Per cent
160 8
Real house price
(left-hand scale)
140 4
120 0
100 -4
Real interest rate
(right-hand scale)
80 -8
1980 1984 1988 1992 1996 2000
An inappropriate setting of interest rates could easily jeopardise financial stability in the domestic
economy. The experience of Norway and other countries shows that credit and property markets can
be very unstable. If interest rates are kept at too low a level for too long, credit demand will rise
sharply, as we witnessed in the 1980s. At that time, rising property prices generated expectations of
further price increases, which in turn led to rising credit demand. When the bubble burst, recession
ensued with falling asset values, a debt crisis and a growing number of bankruptcies. It is important to
bear in mind that this instability is inherent in financial and property markets. We cannot rely on the
memory of market participants.
Interaction with income formation
A precondition for a stable krone exchange rate against European currencies is that price and cost
inflation in Norway must over time not exceed the corresponding aim for inflation of the European
Central Bank (ECB). The ECB orients monetary policy instruments towards price stability, and has
defined price stability as an inflation rate below 2 per cent. The rise in prices for imported goods is
expected to continue to be relatively low, leaving room for a somewhat higher rise in prices for
domestically produced goods and services. Corporate profits and margins vary and influence price
inflation from one year to the next, but are to some extent self-regulating. High margins tend to result
in stronger wage growth, while low margins lead to tighter cost control. Profits will thus revert to
previous levels. Over time, productivity growth therefore determines the level of wage growth that is
consistent with stability in prices and the exchange rate. With productivity growth around the average
for the 1980s and 1990s, ie in the order of one and a half per cent per year, nominal wage growth
should be brought down to between 3 and 4 per cent. There will be room for higher wage growth if
productivity growth increases, as seems to be the case in Sweden and Finland.
Rise in labour costs
Per cent
8
8
6 Norway 6
4 Trading partners 4
2
2
Euro area
0 0
1990 1992 1994 1996 1998 2000
In recent years, cost inflation in the euro area countries and among trading partners has been
relatively low. Growth in labour costs in Norway has been roughly 11 percentage points higher than in
the euro area and 10 percentage points higher than among trading partners in the past three years.
Rise in labour costs and
unemployment
A number of other small, open economies have recorded a decline in unemployment and lower growth
in labour costs than Norway. In Sweden, unemployment has shown a substantial decrease over the
past five years and wage growth is below 4 per cent. Three-year wage agreements are now being
concluded, underpinning the basis for low cost inflation. In the Netherlands, unemployment has fallen
to a very low level. Wage growth has picked up, but is lower than in Norway. In Denmark,
unemployment has come down without an increase in wage growth. In Finland, unemployment has
fallen sharply from the high level that took hold in the 1990s, and wage growth has slowed. In the euro
area, unemployment has dropped without an increase in wage growth. In Norway, the high growth in
labour costs may be a source of rising unemployment.
In connection with the wage settlement last year, short-term interest rates rose by 11⁄2 percentage
points. The substantial rise in costs in Norway, which was reflected in the strong pay increases for
white-collar employees and in the centralised income settlement, contributed to pushing up interest
rates. In previous periods, higher wage growth has also been accompanied by a rise in interest rates.
In 1998, the negotiated wage increases, in conjunction with the depreciation of the krone exchange
rate, led to a rise in interest rates of 41⁄2 percentage points over the spring and summer months. The
income settlement in 1986, which was negotiated during the strongest boom in the post-war period,
resulted in a severe cost shock for Norwegian enterprises and, combined with the fall in oil prices,
forced a devaluation of the Norwegian krone. This was followed by high interest rates over several
years. Falling wage and cost inflation from 1989, however, provided the basis for the decline in interest
rates from 1992. The centralised income settlements are important for wage and interest rate
developments, but they do not take place in a vacuum. The outcome is influenced by labour market
tightness and income developments for groups other than those covered by the centralised
settlements.
Key rates and rise in labour costs
Per cent
Interest rates
8
New Zealand
Norway
Australia
6
Canada UK
US
Euro area Denmark
4
Sweden
2
Japan
0
0 2 4 6 8
Rise in labour costs, 1998-2000
Norwegian key rates are currently 11⁄2 percentage points higher than in the US, 21⁄4 percentage points
higher than in the euro area, and 3 percentage points higher than in Sweden. In some countries,
short-term interest rates are now moving down and in other countries expectations of interest rate
increases have receded. Norges Bank has a neutral bias with regard to interest rates developments,
partly reflecting price and cost developments in Norway, as illustrated in the chart.
In general, it can be argued that when wage and cost inflation is expected to rise and deviate from the
rate of increase in the euro area, or when unexpected upwards shifts in labour costs occur, interest
rates must be raised to avoid rising inflation and a weaker krone. In our open economy, with a floating
exchange rate, it can be assumed that an increase in wage growth of one percentage point will
gradually translate into a corresponding increase in price inflation unless the wage increases are
anchored in higher productivity. The magnitude of the increase in interest rates must be consistent
with this. First, nominal interest rates must be increased in order to maintain real interest rates.
Second, real interest rates must also be increased with a view to removing the causes behind the
differentials.
Interaction with fiscal policy
It is important that the annual budgets are based on a long-term strategy that takes into account
possible fluctuations in oil revenues from one year to the next. With large and, to some extent, varying
budget revenues, the basis for determining central government expenditure and taxes from one year
to the next may easily be impaired. If budget spending is allowed to vary in step with oil prices, the
Norwegian economy may experience abrupt shifts and instability. Changes in oil prices may then
quickly influence wage and price expectations, the exchange rate and long-term rates. In addition,
short-term rates would have to be changed frequently and sharply.
Budget tightening and spending growth
Percentage change from previous year
3 3
Spending growth
2 2
1 1
0 0
-1 -1
Total effect of the budget
-2 -2
93 94 95 96 97 98 99 00 01
In recent years, central government real underlying spending growth has accelerated somewhat. Both
in 2000 and 2001, spending growth has been higher than 2 per cent, which is above potential growth
in the mainland economy. At the same time, taxes have increased. Fiscal policy has thus had a
virtually neutral effect on domestic demand for two years while wage growth has been substantially
higher than in other countries.
A possible interpretation of this development is that it is more demanding to use the government
budget to dampen cyclical fluctuations during an upturn than during a downturn. The willingness and
ability to pursue a counter-cyclical policy may in itself be cyclical.
Another interpretation is that a neutral fiscal policy in a year featuring a sharp increase in government
financial assets reflects a balance between using the government budget to stabilise the economy and
phasing in higher financial revenues in the economy.
Irrespective, a gradual shift in economic policy is taking place. While fiscal policy is having a neutral
impact on domestic demand, monetary policy is having a contractionary effect. This is partly reflected
in higher short-term rates compared with long-term rates. The focus of the income settlements may
also be said to have changed somewhat since the mid-1990s, with less emphasis on balanced labour
market developments.
Natural resources and growth capacity
Petroleum revenues fluctuate widely, with substantial uncertainty as to future developments. This
raises the question of how quickly petroleum revenues shall be used. The term "Dutch disease" was
first used to describe the situation in the Dutch economy in the 1970s and 1980s after revenues from
the large gas finds in the Groningen field were used to finance strong growth in public expenditure.
When the gas revenues declined and growth in the economy came to a halt, a tightening of policy was
necessary and unemployment rose.
The Norwegian economy was also hit by the Dutch disease in the 1980s. The reason was that in the
previous decade the state had budgeted on the basis of future strong growth in petroleum revenues.
Welfare schemes were expanded. As in the Netherlands, manufacturing industry was scaled back.
The recession after the bubble burst in the credit market and oil prices fell in 1986 was much deeper
than would have been the case if we had maintained a larger and competitive manufacturing sector.
Norwegian industry lost export market shares in the late 1980s in spite of the booming conditions
abroad and substantial capacity slack at home. The Dutch disease, both in the Netherlands and in
Norway, led to higher unemployment and substantial social losses. However, in both countries the
economy was back on track in the 1990s.
At the same time, the experience of other countries indicates that in the long run the supply of natural
resources can prove to be just as much of a disadvantage as an advantage for a nation's economy.
Many countries with an abundance of natural resources are poor today. They have not used the
resources to provide for sustainable higher income. Since 1950, developments in many oil-producing
nations have been very unstable, while many Asian and European countries without access to natural
resources are among the world's richest countries. It would appear that easy money can reduce the
growth capacity in an economy. A comparison of economic developments in Norway and the other
Nordic countries in recent years may also be a source of concern. Their business sector now seems to
have a stronger growth capacity than our own.
There are three pitfalls that must be avoided.
First, in countries with substantial revenues from natural resources, growth conditions for the
internationally exposed sector may become less favourable. The exposure of large parts of the
economy to intense foreign competition provides a breeding ground for learning, innovation and
development. Competitive pressures in sheltered sectors, such as internal trade and public
enterprises, are normally more limited. In my view, it is essential to maintain a broad exposed sector in
the mainland economy, primarily because of the effect this has on the growth capacity of the economy.
Second, substantial petroleum wealth can weaken financial discipline in enterprises that are financed
or assume that they can be financed by the public sector. If enterprises assume that the central
government will provide support, resources may be squandered and the risk of substantial losses may
be given little emphasis. The organisation of public enterprises is thus important. The central
government's financial responsibility for individual enterprises and for other levels of public
administration must be delimited in a credible manner.
Third, petroleum production generates a profit in excess of a normal return, ie economic rent. As
economic rent accrues to the state, the central government is now accumulating substantial capital. A
strong interest in gaining access to this capital can easily arise. There is a risk that entrepreneurship,
talent and energy in the business sector and political life are used to acquire a piece of the economic
rent - to dance around the golden calf - rather than for innovation, restructuring and growth.
Decision-making forms in economic and political life must provide an effective shield to prevent special
interests from gaining a dominant influence and control over petroleum wealth. The risk is particularly
high in cases where markets are not efficient and where the remuneration for an assignment or the
price of the resource that is transferred from the state are agreed through negotiations. The EEA
Agreement restricts the scope for favouring individual enterprises or groups of enterprises. The eager
control exercised by the surveillance body, the ESA, reduces the possibility for pressure groups to
prevail. It is important for growth capacity that both national and international competition authorities
engage in effective supervision in order to avoid the development of a business sector that is
dependent on protection.
Against this background, I would like to expand on the central government's asset position and wealth
management.
The government's asset position and wealth management
Government assets and liabilities
Estimates in billions of NOK
Assets Liabilities
Bonds and
Petroleum Fund 390
Treasury bills 170
National Insurance
Fund 50
Direct ownership 300
Minor holdings 100
State banks 165
The table shows in simplified form the central government's financial assets and liabilities, with
estimates for the balance at the end of 2000. The government's most important assets are the
Government Petroleum Fund, assets in the National Insurance Fund, and the state's direct ownership
interests in enterprises. The estimate for the government's direct ownership in the table includes
Statoil, Norsk Hydro, Telenor, Statkraft and DnB. In addition, the state has many smaller stakes and
direct loans through the state banks. The government has loan debt. In the table, the figures for the
National Insurance Fund are consolidated as the Fund's claims on the central government and the
central government's debt to the Fund are offset. The table shows that the central government's loans
through the state banks are approximately the same as the central government's loan debt. The
central government raises loans in the bond market and lends through the state banks. The interest
rate on the loans and the pricing of risk are market-related. If we exclude this credit intermediation, the
management of government wealth is primarily linked to state ownership interests in the Norwegian
business sector, the National Insurance Fund and the Government Petroleum Fund.
The Petroleum Fund
1996-2000, estimates 2001-2005.
In billions of NOK
1200 1200
800 800
400 400
0 0
96 97 98 99 00 01 02 03 04 05
In the years ahead, the capital in the Petroleum Fund will increase as the surplus on the central
government budget is transferred to the Fund. The chart shows the estimates for growth in the
Petroleum Fund. The projections, as they should be, are based on prudent assumptions concerning oil
and gas prices, the return on the Fund and the domestic use of oil revenues.
The state's direct financial interest in petroleum activities (SDFI) may be regarded as part of the tax
system. The government would have had little possibility of ensuring that a sizeable share of the
economic rent benefit society without such a field-specific instrument. It is doubtful whether the
government can fully realise the value of the SDFI through its disposal.
Buyers may have more knowledge about the holdings than the seller. Companies that buy SDFI
stakes will also face some uncertainty as to the future tax system, which will have a negative effect on
their willingness to pay. It is therefore understandable that only a smaller share of the SDFI is offered
for sale. At the same time, the sale of the SDFI increases the need to remedy the substantial
loopholes that have been found in the petroleum tax system.
Government assets and liabilities
Estimates In billions of NOK
Assets
Liabilities
Bonds and
Petroleum Fund 390
Treasury bills 170
Norwegian National
Insurance Fund 50
Direct ownership 300
Minor holdings 100
State banks' lending 165
Right to tax Commitments of the
welfare state
The previous table showing government assets and liabilities does not, however, provide a complete
picture of the government's financial position. The right to tax corporate and personal income and
wealth and to levy indirect taxes is clearly the government's most important asset. General
government tax revenues are estimated at close to NOK630 billion this year. The expected real return
on government net financial wealth is about a sixteenth of this. In 2005, when the value of the
Government Petroleum Fund could reach NOK1200 billion, the total return on government financial
assets will approach one tenth of general government revenues at the current tax level.
At the same time, future expenditure on pensions, health, education, infrastructure and the judicial
system represents a major commitment for the government.
Government expenditure for maintaining and developing the welfare state will increase substantially in
the years ahead, primarily as a result of demographic trends. Estimates show that government
expenditure on old-age pensions and disability benefits will double from 71⁄2 per cent of GDP in 2001
to 15 per cent of GDP in 30 years. At the same time, it is reasonable to assume that spending on other
programmes, which are today financed over government budgets, will increase as a share of total
GDP.
With the current tax level, in conjunction with the challenges that increased trade and globalisation
pose to the tax system, there would hardly be scope for increasing taxes. It would therefore be
reasonable to assert that the value of the right to tax is lower than the value of commitments taken on
by the government when the intention is to develop the welfare state. Without substantial government
saving in the years ahead, promises to preserve the welfare state will lose credibility. The government
thus has a clear motive for saving. At the same time, the high level of petroleum revenues, as
mentioned, provides scope for accumulating substantial government financial wealth.
In my view, three points are of importance with regard to government wealth management.
First, investment must be based on the reason underlying government saving which, as I understand
it, is to distribute petroleum wealth across generations and establish a foundation for maintaining
important elements of the welfare state.
Second, the manager must seek to achieve a maximum return within duly considered risk limits.
Returns and risk must be monitored continuously. The return and the risk limit must reflect the
government's motive for saving.
Third, the management must be organised so that the manager pursues the objectives of the owner
and does not develop its own goals.
The government's motive for saving resembles the motives underlying saving in pension funds and life
insurance companies. Among the government's saving vehicles, investments in the National
Insurance Fund and the Government Petroleum Fund are best adapted to this motive for saving.
For both funds, there is a clear division of responsibility between the manager and the government,
with the Ministry of Finance as owner. In the case of the Petroleum Fund, Norges Bank's mandate is
to achieve the highest possible financial return in keeping with the strategy and risk limits established
by the government.
The Fund's investments are distributed among many countries and spread among a large number of
equities and bonds. At end-2000, the Fund had invested NOK 153 billion in about 1800 companies in
21 countries, while NOK 234 billion had been invested in bonds in 18 countries. All ownership interests
are now less than 1 per cent of the companies' total value. A turnaround in one country or a region,
which in isolation may be pronounced, will not have a major effect on the total value of the Fund. The
value of the Fund's equity portfolio will therefore shadow developments in prices on international stock
exchanges. There is a substantial element of risk diversification, although we are not immune to the
risk associated with the uncertainty in global developments. Along the same lines, the return on bond
investments will reflect international interest rate developments.
The Government Petroleum Fund is built up through transfers of petroleum revenues that are not used
domestically. In other words, the value of a natural resource is converted into a financial asset. The
name of the Fund was chosen to reflect this. However, one weakness that may be associated with the
Petroleum Fund is that the objective of saving is not sufficiently highlighted. The future use of
revenues could have been made clearer either by choosing another name or by earmarking the capital
for specific future uses, even though this would imply a constraint on the government's scope for
manoeuvre. The study that is being planned may analyse fundamental and practical aspects of
establishing a link between the pension system in Norway and the assets in the Government
Petroleum Fund.
The National Insurance Fund's investments are mainly confined to Norway. As a result, changes in the
value of the Fund's equity portfolio primarily reflect developments in Norwegian business and industry.
The Fund has larger ownership interests in individual companies than the Petroleum Fund, and wider
fluctuations in value.
State ownership
NOK bn Financial investor Strategic owner
15 0
High
10 0
Risk
5 0
Low
0
0 - 1 1 -5 5 - 1 0 1 0 - 1 5 1 5 -4 0 4 0 - 4 9 5 0 -7 4 7 5 - 9 9 1 0 0
Ownership interests per enterprise
Petroleum Fund's National Insurance
Direct ownership
equities Fund's equities
As indicated in the chart, the government has substantial holdings in individual companies. The
government's five largest stakes in Norwegian companies can be roughly estimated at
NOK 300 billion. In general, concentrated ownership requires a more strategic ownership approach
and gives rise to higher risk than diversified ownership.
Risk associated with state
ownership
NOK bn
The five largest
state enterprises
300
Petroleum
Fund's bonds
Petroleum
200
Fund's equities
100
National Insurance
National Insurance
Fund's private bonds Fund's equities
0
0 10 20
Return risk
This is illustrated further in the chart. The composition of government assets is broken down into
equities and bonds in the Petroleum Fund and the National Insurance Fund and government
ownership interests in the five largest companies. The horizontal axis provides a normal measure of
risk, in other words the standard deviation of the return. The risk is estimated on the basis of the
historical performance of the companies' share prices. For unlisted companies, we have used share
price performance for comparable international companies. Higher risk means that the assets are
more exposed to fluctuations in return. As a whole, the return on the Petroleum Fund and the return on
private bond holdings in the National Insurance Fund feature a moderate risk profile. The risk is higher
for both the National Insurance Fund's equities and the state's ownership interests in the five largest
companies.
For a given expected return, the owner should aim at reducing risk because future income will then be
more secure. Conversely, the owner should require a higher return on investments with higher risk.
The absence of this excess return will reflect social losses.
It is important to bear in mind that the government can choose the composition, the required return
and the risk profile with regard to its financial investments without taking into account the funding
requirements of Norwegian companies. By the same token, Norwegian companies can choose their
debt and equity structure independent of the government's financial investments. The capital market
serves as an intermediary between the government as investor and enterprises seeking capital. This
market makes it possible to separate the government's choices from companies' choices. The
distribution of the government's financial investments and the choice of corporate funding structure
should not be based on the notion that we are living in a barter economy. The Norwegian capital
market is part of a Nordic market, which is being increasingly integrated into an international capital
market. Capital markets are a very efficient tool for channelling funds from savers to investors.
Direct strategic ownership could nevertheless be the best solution if it generates a high return and the
government has a solid basis for exercising its role as owner. There is some room for doubt
concerning both points. The government has often neglected its demanding role as owner. A number
of shortcomings stand out with regard to the way government ownership is managed.
First, the government has shown little ability and willingness to impose clear and ambitious return
requirements and control the financial risk in companies where it has a dominant stake. In addition, if
the companies are underperforming, both jobs and regions will be adversely affected.
Second, the government has not developed effective management of equity in the companies. The
size of equity and the dividend policy seem to be randomly determined by historical factors. New
equity management instruments, such as share buy-backs and extraordinary dividends, are seldom
used. On the whole, it seems difficult for a state-owned enterprise and for the state as owner to
acknowledge that a growth period may have come to an end and that the owners should invest their
capital elsewhere.
Third, the state as owner will always have a strong aversion to negative corporate events. On the
other hand, the state will provide little extra rewards to a company that has boosted its return on equity
by one or two percentage points. The result is an erosion of an important driving force behind growth.
In a state-owned enterprise the board or management of the company and the state as owner may
have a common interest in overcapitalising the company because they will then both be on the safe
side.
Fourth, the state has complex and elaborate procedures for making decisions. Moreover, the
procedures are designed to accommodate tasks other than the role of ownership. Studies in political
science show that the weighing of interests occurs through deliberations in ministries or parliamentary
standing committees. As a result, decision-making procedures may not be suitable for the owner to
provide clear management signals and ensure c