temporarily increased by nok 20 per barrel, or a little less than usd 3 per barrel. this is a small change, well within normal variations from one year to the next. the central government ’ s net cash flow from petroleum activities would then increase by around nok 16 billion the first year and nok 20 - 22 billion the next. this corresponds to almost 2 per cent of norway's annual gdp. if the increase in the cash flow is taken into the economy through higher expenditure or reduced taxes in the central government budget, aggregate domestic demand will be affected. higher expenditure requires an increase in the public sector's use of real resources, primarily labour. two per cent of gdp is then a substantial figure. if the increase in petroleum revenues is used domestically, this would correspond to almost all the annual growth in the mainland economy in a normal year. if the private sector of the economy is also expanding, and the economy is already close to its capacity limit, this policy would swiftly lead to strong pressures on economic resources. this would result in a rise in wages and prices. this policy would also lead to unstable conditions in the foreign exchange market. when oil prices then fell again and central government expenditure dropped, the economy would experience a very strong contraction. the government petroleum fund was established in 1990 with a view to safeguarding long - term considerations in the use of petroleum revenues. the idea behind the petroleum fund is that the cash flow from an increase in the oil price should accrue to the fund and be invested abroad and that the increase in the oil price should not affect the wider budget. thus, rather than affecting the domestic economy, the increase in the cash flow would be invested abroad through the petroleum fund. similarly, a fall in the oil price would not affect the domestic economy, but would result in lower accumulation of foreign assets. by building up the fund, the aim of ensuring that several generations will enjoy the benefits of our petroleum wealth is also taken into account. in march 2001, the fiscal guideline and new guidelines for monetary policy were introduced. the guideline for fiscal policy implies that the central government budget deficit shall be equivalent over time to the expected real return on the government petroleum fund. the new guidelines for economic policy received broad support in the storting. the guideline specifying that only the real return on the petroleum fund is to be used means that the capital in the fund is not depleted. the capital in the petroleum fund will increase as long as there is

these companies. our long time horizon exposes us to developments in markets traditionally of less concern to more short - term investors. we use our position as a shareholder to address topics relating to traditional shareholder rights, such as the right to equal treatment and influence. we also focus on topics that influence the development and regulation of companies ’ input factors – both regarding human resources such as labour, in particular children ’ s rights, and natural resources such as access to clean water and clean air. norges bank ’ s executive board has established a set of principles and a strategy for the exercise of ownership rights. openness and transparency are key principles in the management of the government pension fund – global, and we aim to be as open as possible about our active ownership work. our active ownership is practised in a number of different ways : through the exercise of voting rights, through dialogue and engagement with individual companies, through collaboration with other investors, through submissions to the regulatory authorities, and through research and public communication. we aim to vote at all general meetings of the companies in which the fund has shares. we voted on 68 724 items at 7 871 general meetings in 2008. the impact of the crisis on the norwegian fund the norwegian fund has been hard hit by the crisis. in 2008, the total return on the fund was a negative 23 per cent, the weakest in the fund ’ s history. there was a negative return of 41 per cent on the equity portfolio, while the return on the fixed income portfolio was close to zero. the real rate of return after costs has been 1 per cent since 1998. this is well below the assumed long - term return of 4 per cent. the negative return reduced the value of the fund by nearly usd 100 billion. at the same time, new capital of close to usd 60 billion was transferred to the fund during the year, the largest annual inflow in the fund ’ s history. furthermore, a weaker krone in relation to the currencies in which the fund is invested increased the fund ’ s value by some usd 80 billion. consequently, in spite of the negative return, the fund ’ s market value increased by nearly usd 40 billion during the year. the market value of the pension fund was around usd 350 billion ( nok 2 275 billion ) at the end of 2008. the financial crisis is having a broad impact, and most forms of investment are falling in value. other government assets, such as shareholdings in domestic industries and subsea