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Improved financial situation of general government
statistikk
2011-01-06T10:00:00.000Z
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, 2009

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Improved financial situation of general government

In 2009, central government improved its financial balance sheet through both through revenue and positive revaluations of its existing portfolio of financial assets. Local government did not experience a similar positive development, but for general government in total, net financial assets substantially improved to an all time high of NOK 3 714 billion at the end of 2009.

StatBank table 07511: General government financial assets and liabilities, by subsectors and financial instruments (mill. NOK) , is updated quarterly, while data in ordinary tables are updated and published yearly and accompanied by an article such as this.

The statistic General government financial assets and liabilities is based on a close collaboration with Financial accounts . Financial accounts implements all new information available and publishes this at the next publishing date. To secure that General government financial assets and liabilities figures are in accordance with Financial accounts, the data in Statbank is updated every time Financial accounts publish new data.

The last update of the Statbank table was 1.4.2011.

(1 April 2011)

Central government’s surplus, measured by net lending, fell from NOK 525 billion in 2008 to NOK 277 billion in 2009. The decline was mainly due to lower revenue from petroleum activities. Central government’s net financial assets increased by NOK 549 billion, with positive revaluations of central government’s stock portfolio being a substantial contributor together with the aforementioned surplus.

Central government reduced its debt by NOK 269 billion from NOK 1 104 billion in 2008 to NOK 835 billion in 2009. A large portion of the debt reduction has to do with repurchase/re-sale agreements, a part of the Government Pension Fund - Global’s investment strategy. More on this topic in the info box below.

Revaluations make up for currency exchange losses

Due to the significant level of financial investment abroad, changes in currency exchange rates are highly influential on central government’s net assets when valued in Norwegian kroner (NOK). In 2009, the Government Pension Fund - Global, which is classified within the central government, had actual and unrealised losses on stocks and long-term bonds of NOK 480 billion due to a strengthening of the NOK. At the same time, the strengthening of the NOK also affected debt attached to Government Pension Fund - Global, reducing debt by more than NOK 50 billion.

However, these losses were offset by positive revaluations of stocks and long-term bonds totalling NOK 577 billion.

Local government

Local government deficit, measured by net lending, fell from NOK 31 billion in 2008 to NOK 21 billion in 2009. At the end of 2009, net financial assets showed net debt of NOK 102 billion, increasing from NOK 85 billion the previous year. Due to revisions, figures for local government debt have been adjusted when compared to previously published data (see the info box below).

Of local government’s total debt at the end of 2009, totalling NOK 331 billion; almost 70 per cent consisted of loans, mainly issued by mortgage companies. On top of increased levels of such loans, local government also issued new long-term bonds valued at NOK 13 billion, increasing their total debt from issued long-term bonds by 50 per cent compared to 2008.

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 2009, gross public debt, according to the EU’s definition, totalled NOK 1 026 billion, or 43.1 per cent of GDP, down from NOK 1 235 billion or 49.1 per cent of GDP in 2008. The high levels and the large annual fluctuations are partially explained by debt connected to the Government Pension Fund - Global (info box below).

Gross public debt in accordance with the Maastricht Treaty. NOK million
Year Gross public debt.
Face value 		Gross domestic
product 		Gross public debt
as a percentage
of GDP
2000  421 918 1 481 241 28.5
2001  423 305 1 536 887 27.5
2002  527 450 1 532 307 34.4
2003  675 588 1 593 826 42.4
2004  770 909 1 743 041 44.2
2005  832 163 1 945 716 42.8
2006 1 174 115 2 159 573 54.4
2007 1 170 492 2 271 607 51.5
2008 1 234 898 2 516 800 49.1
2009 1 026 100 2 380 851 43.1
 

The development over the last few years

At the end of 2009, central government’s debt was NOK 835 billion; the lowest since 2005. Over the same period, total assets have increased from NOK 1 523 billion to NOK 4 651 billion. Vast surpluses, predominantly due to high levels of revenue from petroleum activities, have contributed to the increase in financial assets held.

For local government, the picture is very different. Several years with significant deficits, measured by net lending, has led to net financial liabilities increasing from NOK 41 billion in 2005 to NOK 102 billion in 2009.

Revision of assets and debt between subsectors of general government

Due to discrepancies between current transfers in the central and local government’s non-financial accounts, a financial asset and debt has been recorded in the financial accounts of these two subsectors of general government. As a result, the local government accumulated debt of approximately NOK 40 billion to the central government. This inter-governmental asset/debt is now eliminated for the period 1995-2009.

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.

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