øystein olsen : managing natural resources - lessons from norway speech by mr øystein olsen, governor of norges bank ( central bank of norway ), at the seminar & quot ; preparing mozambique for natural gas & quot ;, bank of mozambique, maputo, 27 march 2019. * * * accompanying slides. let me start by expressing my heart - felt sympathy for the victims of the cyclone that struck your country. i am both honoured and saddened to be here at this difficult time. i can hardly imagine the pain and sorrow so many of your people are now experiencing. mozambique is a country of great beauty and is now an emerging leader in the natural gas industry.. for norway, on the other hand, petroleum production peaked some years ago. as a nation, we have benefited tremendously from the revenues and the activities. let me share some of our experiences with you. norway is a small, open economy, which was transformed by the discovery of oil on our continental shelf almost 50 years ago. back in 1970, the year after the first discovery, income levels were relatively low compared with other western countries. that picture has changed completely. today, norway ranks among the richest countries in the world. for some countries, natural resource discoveries have been identified as a curse. for norway, the discovery of oil has been a blessing. we have managed to transform oil and gas resources into real and financial assets. luck has been supplemented with what i dare to claim is sensible resource management, based on a well - functioning democracy and longstanding and trustworthy institutions. the first point i would like to emphasise is related to ownership of the natural resources. at an early stage, it was concluded that such resources belong to the norwegian people. direct government participation in the industry and an extraordinary tax rate on oil company profits, currently 78 percent, ensure that most of the resource rents flow into government coffers. the government also has direct ownership stakes in the most profitable oil fields. chart : from natural resources to financial wealth petroleum revenues have been redistributed to all inhabitants in form of investment in infrastructure and public services, such as education and health care. at the same time, revenues have been put aside. this brings me to my second main point. it is important to remember that although revenues from the extraction of a depletable resource count as income in the national accounts, these revenues are of a special kind. in many ways, it would make more sense to view

, the interest rate may be raised to a higher level and more rapidly than currently envisaged. fiscal policy is expansionary this year, and according to the national budget for 2010, fiscal policy will provide further, albeit milder expansionary impulses to the economy next year. under the fiscal rule, the government budget deficit should be reduced to about 4 per cent of the capital in the government pension fund – global when activity in the economy has resumed a normal level. norges bank ’ s projections are based on the technical assumption that the structural, non - oil budget deficit in 2011 and 2012 will remain unchanged from the level in 2010. if growth in the government pension fund – global is lower than in previous years, the deficit will still be more than 4 per cent of the fund ’ s capital, even after capacity utilisation has risen to a normal level. if economic developments are broadly in line with projections, fiscal policy conducted in accordance with the fiscal rule could result in a lower interest rate and a weaker krone than projected. unemployment is high in many countries. unemployment in norway has not risen as sharply as previously projected. the number of registered unemployed was 2. 8 per cent of the labour force in october, unchanged from september. this is very low compared with other countries. the decline in employment has been less marked than the fall in activity would imply. unemployment may be low partly because it may have taken time for enterprises to adapt their workforces to the sharp fall in production, and partly because some enterprises have decided to maintain their workforces in anticipation of a pickup in demand. in many sectors, the level of employment is nevertheless high in relation to output, and productivity in the past year has been at its lowest level since 1988. the projections are based on the assumption that productivity will gradually improve, reducing the pressure on firms ’ costs somewhat. the projections are also based on improved profitability through an increase in prices. if firms instead reduce employment more rapidly and markedly in order to improve productivity, that will lead to higher unemployment and lower wage and price inflation than projected. the interest rate may then be kept lower for a longer period than currently envisaged in order to ensure that inflation returns to target. wage growth is projected to decrease to around 4 per cent in 2009. weak manufacturing profitability as a result of both a fall in product prices and a low productivity level suggest moderate wage growth ahead. at the same time, wage growth among trading partners is low. as a result,