fall, oil companies invested about as much as all businesses in the mainland economy combined. total oil - sector demand 4 amounted to more than 13 percent of mainland gdp in 2014. this is well above current government spending of oil and gas revenues, and also more than the estimate of the permanent income. graph : demand from the oil and gas sector and government spending of oil / gas revenues it has been estimated that one in nine jobs in the norwegian economy was related to oil sector demand in 2014. 5 the step - wise development of oil and gas reserves in the north sea has helped to create a supply industry that has become world leading in special areas. the downturn following the oil price decline in 2014 has highlighted the oil - dependence of the norwegian economy. as oil - sector demand plummeted, the blow to the economy was cushioned by a substantial increase in government spending. this room for manoeuvre in fiscal policy was provided by the significant savings in preceding years. without it, the recent downturn could have become much more painful. intergenerational concerns graph : old - age dependency ratio allow me to move on to another argument for relatively high saving : the intergenerational challenges facing the norwegian economy. like many other countries, we must cope with the challenges associated with an ageing population. as we have developed a more extensive welfare state than many other countries, the impact on public finances is significant. the pension system is basically pay - as - you - go and health care is also funded by the government. an ageing population will therefore weigh quite heavily on public finances. in the 1990s and 2000s the demographic trend was different. during those years, the share of the population 67 years or older actually declined, mirroring low birth rates between the two world wars. since around 2010 the long - term trend towards a higher old - age dependency ratio has resumed. public pension costs have shot up as baby boomers have retired. the burden on the health and long - term care system is rather light at the moment. but this will change in the coming years. with the alternative strategy of spending the permanent income, we would have spent more of the oil wealth in the 1990s and 2000s, when demographic costs for the government were low. the present fiscal rule, on the contrary, allows increased spending of oil revenue also in a period where age - related costs are expected to grow much faster. 4 / 6 bis central bankers'speeches uncertainty a third concern related to wealth management is uncertainty

more cautious spending path than the permanent income rule. the government spends the expected return on its current financial assets, which is significantly lower than total oil and gas wealth. graph : oil and gas revenues and government spending the fiscal rule implies that real spending will increase as long as production continues, i. e. until all oil and gas resources are transformed into financial wealth. as the economy grows, spending as a share of mainland gdp will nevertheless fall slowly. this is illustrated in the graph. the graph also illustrates that we have been able to cut through the very large, but temporary income flows at the beginning of the present century. since 2016, government spending has exceeded the net cash flow from the oil sector. this means that we are running a primary deficit and will continue to do so for the foreseeable future. currently, the transfer from the fund equals 8 percent of mainland gdp. eventually, as delayed consumption increases accumulated returns, spending according to the fiscal rule will also surpass the current estimate of the permanent income. the real issue is thus a question of timing. has this spending profile been too conservative, and the increase in consumption delayed for too long, as bergsten and gagnon claim? my brief answer is no. my first argument is that the conclusion to spend the permanent income does not take into account the resource movement effects discussed above. but also intergenerational concerns, uncertainty and considerations about political processes may favour a more cautious spending rule. i will address these issues in turn in more detail in the following. graph : arguments for higher saving 3 / 6 bis central bankers'speeches resource movement as described in the seminal paper by corden and neary, a resource economy is affected by strong structural changes also due to increased demand for labour and capital from the extraction industries. eventually, demand from the oil - related sector will decline, and it will be necessary to reverse a downsizing of manufacturing. to avoid “ dutch disease ” effects, spending should be well below the permanent income level during the extraction period. let me shed some light on the direct demand from the companies that operate on the norwegian continental shelf. graph : the norwegian troll a platform and some other structures crude oil and natural gas are extracted from large depths below the sea level. in particular, capital expenditure is high. the platform “ troll a ” provides a striking example. if most of it was not covered by water, it would dwarf some other, well - known structures. in the years prior to the recent oil price