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General government net financial assets decrease in 2008
statistikk
2009-12-16T10:00:00.000Z
Public sector;Public sector
en
offogjeld, General government, financial assets and liabilities, central government, local government, stock, transactions, assets by type (for example bonds, shares, lending), net assets, liabilities by type (for example commercial papers, bonds, loans)Local government finances , General government , Central government finances , Public sector
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General government, financial assets and liabilities, 2008

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General government net financial assets decrease in 2008

Despite record high net lending/borrowing of NOK 480 billion, General government net financial assets decreased in 2008. At year end, net financial assets amounted to NOK 3 174 billion; a decline of NOK 64 billion, or 2 per cent, compared to 2007.

General government. Change in net financial assets 2002-2008. NOK billions

The weak development in net financial assets, compared to the rapid growth of preceding years, was mostly caused by substantial losses in the General government’s share portfolio. Other changes in the existing share portfolio showed revaluations adding up to a loss of NOK 646 billion, while new purchases constituted NOK 555 billion.

Financial assets

At the end of 2008, General government total financial assets amounted to NOK 4 601 billion; an increase of 0.7 per cent since 2007. Long-term bonds were valued at NOK 1 673 billion, or 36 per cent of total financial assets, making it the largest financial asset when classed by type. The yearly growth of the long-term bond portfolio was as high as 43 per cent, caused by positive revaluations of NOK 289 billion, and purchases of new long-term bonds totalling NOK 218 billion. General government’s stock portfolio was valued at NOK 1 567 billion, or 34 per cent of total financial assets. Loans receivable was reduced from NOK 940 billion in 2007 to NOK 605 billion in 2008.

Financial liabilities

General government financial liabilities were NOK 1 427 billion at the end of 2008, up 7.3 per cent for the year. The liabilities consisted mostly of loans, totalling NOK 955 billion; 67 per cent of total financial liabilities.

Gross public debt

One of the main criteria of the Maastricht Treaty states that a country’s gross public debt should not exceed 60 per cent of its gross domestic product (GDP). Gross public debt, as defined in the Maastricht Treaty, is often used in international comparisons. It includes gross debt from bonds, loans, certificates, commercial papers and treasury bills, measured at face value and consolidated for debt between different units within the general government.

In 2008, gross public debt, according to the EU’s definition, totalled NOK 1 269 billion, or 49.9 per cent of GDP, up from 52.4 per cent in 2007. The high levels are explained by debt connected to the Government Pension Fund - Global (info box below).

Central government

Net financial assets fell by NOK 27 billion despite a large surplus in Central government of NOK 505 billion, measured by net lending/borrowing. Other changes reduced the existing stock portfolio by NOK 636 billion, and were the main reason for the reduction in net financial assets.

Local government

Local government’s net financial debt increased by NOK 36 billion from 2007 to 2008, mostly due to a deficit, measured by net lending/borrowing. The deficit was financed partly by new loans, but also by both long and short-term bonds being issued.

Liabilities connected to the Government Pension Fund - Global

Repurchase agreements and re-sale agreements in securities are frequently used instruments in the administration of the Government Pension Fund - Global. The fund sells a portfolio of securities accompanied by a repurchase agreement. In the accounts, the portfolio remains on the asset side of the fund’s balance sheet. The corresponding sales value is entered as a loan from the buyer on the liability side of the balance sheet. The reverse situation is called a re-sale agreement or a reversed repo.

The European System of Accounts (ESA) requires that re-purchase agreements must be included in the balance category loans. This means that liabilities associated with repos in the Government Pension Fund - Global are included in the official estimation of Norway’s gross debt. As repurchase agreements inflate both sides of the balance, the gross debt, calculated according to ESA, presents a misleading picture of the financial situation of the general government in Norway.

New tables

As of this release, Statistics Norway will publish General government financial assets and liabilities in a new, updated version. The new tables are based on a close collaboration with Financial accounts , and will, to a larger extent, make use of counterpart information. The main goal is a more realistic view of the general government’s financial situation. The new tables are based on IMF’s Government Finance Statistics Manual 2001 (GFSM 2001) and European System of Accounts (ESA).

The tables presented here, as well as the new extensive Statbank table, are partly based on new information, and therefore not comparable with previously published tables, which no longer will be updated. The new tables present financial assets at end of year balance (stock), as well as accumulated transactions and other changes throughout the year (flows). Data are published for general, central and local government, and for the period 1995-present (available in Statbank).

In previously published tables, data older than two years were made final, and changes were only made in connection with announced revisions. As of this publication, and in agreement with the practice used by Financial accounts, all new information available is implemented and published at the next publishing date. Also, the data in Statbank is updated quarterly, in order to be in accordance with data published by Financial accounts. Data in ordinary tables are updated and published yearly and accompanied by an article such as this.

The change in net financial assets from the end of one year to the next is in its entirety explained by either transactions (purchases/sales) or other changes (value or volume changes on existing portfolio). See diagram 1. While net financial assets is a stock, measured on 31 December, transactions and other changes are flows which are summed up for the year. Calculating the end of year stock/balance of year (t) is therefore as follows:

Stock/balance (t) = Stock/balance (t-1) + Net borrowing/lending (t) + Net revaluations (t)

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