Oil sales make Norwegian state treasury overflow

Mar 18, 2008 01:00 AM

Norway's state treasury is set to overflow, local analysts claim. Some think the price of North Sea crude oil will hit $ 130 a barrel, pumping even more "petro kroner" into the state budget and giving politicians few excuses to limit its use.
Some grades of crude oil hit $ 111 a barrel. The North Sea Brent crude that's been pumping up Norway's economy for years was being traded at just over $ 107 a barrel.

Analysts at Norway's largest bank, DnB NOR, raised their own oil price prospects to $ 130 a barrel by 2015. That forced the bank's economists to radically adjust the amount of money such oil revenues will generate for Norway's state budget.
DnB NOR's chief economist then predicted that an extra NOK 1,200 bn would likely flow into state coffers over the next seven years, giving politicians "considerably more money to work with."

Chief economist Oystein Dorum also noted that the state's so-called "oil fund," into which revenues are set aside for future generations and pension obligations, will grow to a staggering NOK 5,700 bn by 2015, well above the NOK 4,351 bn currently estimated by state officials.
That would allow increased current use of oil revenues, he noted, adding that it would be "meaningless" for Norwegian politicians to use less oil money than the country can afford.

Government services in decline
Therein lies the irony facing many Norwegians today. While the country already is flush with oil revenues from today's already-high oil prices, criticism runs rampant over what's perceived as a declining level of public services.
Hospital budgets are being cut, schools are rundown and students are testing poorly, few Norwegians believe the police will be there to help them if needed, nor are there any guarantees that nursing home beds will be available when needed. The papers are full of stories every day about various government agencies blaming a lack of funding for their inability to deliver social services.
With more money flowing into the statefrom oil and taxes than ever before, this raises questions and has sparked political debate in Norway.
The current left-centre coalition government is under increasing pressure to deliver on campaign promises before the next round of state elections next autumn.

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