wage growth reaches a level that is inconsistent with the inflation target, the result will be higher interest rates, lower employment and higher unemployment. similarly, when wage growth is lower than the level consistent with the inflation target, the result will normally be lower interest rates, higher employment and lower unemployment. the sharp growth in labour costs in recent years is a source of higher unemployment. when real wage growth is higher than productivity growth, corporate profitability declines. as a result, businesses will recruit less and shed more labour. in the public sector, we will see a growing conflict between budget limits and service production requirements. a monetary policy that is oriented towards low and stable inflation will contribute to stabilising aggregate demand and output. as a result, the central government budget will not normally have to be used actively to stabilise the economy. an increase in unemployment that is due to a higher rate of increase in labour costs than implied by productivity growth cannot be offset by low interest rates or higher public spending and tax cuts, but requires changes in the functioning of the labour market. there is an important interaction between monetary policy and fiscal policy. according to the new guidelines for fiscal policy, petroleum revenues are to be phased in approximately in pace with the expected real return on the government petroleum fund. this guideline implies that fiscal policy will contribute to stimulating aggregate demand in the norwegian economy every year for many years ahead. the guideline also implies that the use of petroleum revenues will increase as long as the petroleum fund is expanding. variations in oil prices are accompanied by considerable fluctuations in government petroleum revenues from one year to the next. it is important to prevent these fluctuations from spilling over to the mainland economy. public expenditure and taxes that vary in relation to oil prices would result in an unstable economic environment. financial markets would be marked by uncertainty and turbulence, with an increase in the risk premium on norwegian securities. this would have resulted in higher and more variable interest rates. the risk of financial crises in norway would also have increased because the cyclical fluctuations in the norwegian economy would have been more pronounced. it is therefore an advantage that fiscal policy is now predictable and anchored in a longterm strategy. the future size of the petroleum fund depends on oil price developments. the guideline ensures that we only use the return on wealth that has already been accumulated. this makes policy robust to changes in oil prices and ensures that petroleum wealth will be of benefit both today and in the future. the guideline provides a framework that contributes to making

competitive local private sector. we welcome this effort to collectively rethink our approach to evolving contexts, particularly through broader analyses of the drivers of social unrest and violent upheavals and a strengthened regional perspective. we commend management for the continued implementation of the g20 capital adequacy framework ( caf ) review, designed and launched under the italian g20 presidency. we note with satisfaction that the caf measures adopted so far are set to boost the ibrd's lending capacity by more than $ 100bn over a decade, a figure higher than what the 2018 general capital increase has provided over the corresponding 10year horizon. the increase of ibrd financing power will allow better response to global challenges and traditional development goals. the g20 caf review has also spurred ifc and miga to put forward equally transformative programs and products. much can still come from further implementation of the caf recommendations. we stand ready to evaluate and help devise additional measures and finetune existing instruments, at the board, with other relevant entities, and in international fora. private capital mobilization remains crucial to meet the needs and aspirations of developing and emerging countries. we welcome additional efforts to mobilize institutional investors and promote local private sector development. we therefore applaud the launch of the private sector investment lab and ifc's development of the 2 / 3 bis - central bankers'speeches warehouse - enabled securitization platform ( wesp ), renewed diagnostics, targeted government dialogue, and business - enabling policy reforms. we encourage progress on the global emerging markets risk database ( gems ) initiative, as part of a larger effort to improve information gathering and knowledge sharing within the larger investment community. the wb should work to maximize domestic resource mobilization, including through the new public finance review ( pfr ). envisaging a clear and effective division of labor, we invite the wb to collaborate closely with other partners, in particular the imf. the ability to put good ideas to good use is just as important as financing. we should therefore focus discussion on promoting innovation, building capacity in client countries, and developing bankable projects. within the wider agenda of the new wb playbook, we consider three workstreams of utmost importance. first, a strengthened one world bank approach. this should better integrate policy advice and public sector financing with private sector development and capital mobilization, thereby feeding into a revamped cascade approach. second, stronger partnerships, which should also lead to more effective country platforms.