at the time were probably in doubt as to whether any savings would ever be accumulated in the fund. and initially the fund structure was only an exercise in accounting. government petroleum revenues were deposited in the fund, but the entire amount was transferred back to the central government budget to cover some of the non - oil deficit. but the norwegian economy rebounded. see chart “ first deposit in the fund ” at the end of the speech. it took a generation from the discovery of the first oil field in the north sea until it became possible for the government to set aside a portion of the economic rent. the first net transfer to the fund of close to nok 2 billion was made in 1996. every year since then, as a savings plan, the government has let a substantial share of current income from oil and gas remain as deposits in the fund. at the end of the first quarter of this year, the fund ’ s market value stood at nok 2 763 billion. see chart “ the fund ’ s market value ” at the end of the speech. as the fund increased, the need for a plan for the phasing in of oil revenues became evident. in 2001, the government and the storting adopted the fiscal rule, which is based on the deposit of government petroleum revenues in the oil fund. an amount equivalent to the expected real return on the fund, or 4 per cent, as an annual average over time, is transferred back to the central government budget to cover current expenditure. the transfers increase as the fund rises in value. along the way, the name of the fund has been changed from the government petroleum fund to the government pension fund global. there are prospects that new annual transfers to the fund may be made over the next 10 years or so. this implies further growth in the fund, perhaps up to twice the size of today ’ s see nou ( official norwegian report ) 1983 : 27 “ petroleumsvirksomhetens framtid ” [ the future of petroleum activity ]. fund, which corresponds to one and half to two times annual gdp for norway. public expenditure accounts for about half of gdp. withdrawals from the fund at 4 per cent can therefore finance 15 per cent of public spending in 10 years ’ time. this can continue on a permanent basis without reducing the capital in the fund. the fund will therefore lead to smaller cuts in government welfare spending than would have been the case without the fund as the costs related to the ageing of the

those fabrics of hers to her heart ’ s content ; holland her chambrays ; florence her cloth ; the indies their beaver and vicuna ; milan her brocades : italy and flanders their linen, so long as our capital can enjoy them. the only thing it proves is that all nations train journeymen for madrid and that madrid is the queen of parliaments, for the world serves her and she serves nobody. ” see report no. 25 ( 1973 – 74 ) to the storting : “ petroleumsvirksomhetens plass i det norske samfunn ” [ the role of petroleum activity in norwegian society ]. the paradox of plenty. oil booms and petro - states by terry lynn karl ( 1997 ) provides a good overview of oil nations ’ problems. from time to time, i meet representatives of the diplomatic corps in norway. they seldom fail to mention the high cost level in norway and their bewilderment over aspects of our way of life. a 17th century moroccan ambassador was even more critical in his account of the wealthiest nation at that time : “ … the spanish nation today possesses the greatest wealth and the largest income of all christians. but the love of luxury and the comforts of civilization have overcome them, and you will rarely find one of this nation who engages in trade or travels abroad for commerce as do the other christian nations [ … ]. similarly, the handicrafts practiced by the lower classes and common people are despised by this nation, which regards itself as superior to other christian nations. most of those who practice these crafts in spain are frenchmen [ who ] flock to spain to look for work … [ and ] in a short time make great fortunes. ” see chart “ petroleum production ” at the end of the speech. the oil age in norway has now spanned about 40 years and there are prospects that it will continue for some time ahead. we will most likely still be producing petroleum in 40 years ’ time, but oil production has declined in recent years after peaking in 2000. gas production is rising, but not at a pace sufficient to sustain overall petroleum production. the idea of an oil fund was raised in the beginning of the 1980s 3. it was intended to be a buffer fund to smooth variations in government oil revenues. the act relating to the government petroleum fund was adopted in 1990 in the midst of the deepest economic downturn in norway since the second world war. those at the ministry of finance working on the law