With Parliamentary elections looming, more Norwegians than usual are asking themselves the tough questions. It is now apparent that the slump in oil is not a temporary one. What will the country do now? Time for the lottery winner, after receiving the last annuity, to get a job before burning out the savings. Many are looking towards the sea, fishing and exploiting underwater natural resources. Others are looking to blast open the mountains to do the same.
However, commodity based economies, third-world in nature, are subject to mother nature’s whims, innovation, and ruthless competition. Moreover, it creates complacency, catching the nation off guard when there is a shift in the supply curve (instead of hitting peak oil, the opposite happened). Hence, the decisions or lack thereof, made during the next four years will impact future generations. Two generations of Norwegians grew up on the delusion that their society, built on pre-socialist values and high oil prices, can endure any challenge.
The Fund’s withdraws could accelerate amid a global financial crisis: politicians burning cash to shore up the economy and secure votes.
Currently, assuming constant tax revenues, budget and oil fund value, Norway is in great shape: able to fill the budget gap for the next 30 years. But then what?
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