Notes from the Nordics: GPFG brought into politics

The Norwegian Government Pension Fund Global (GPFG) is a phenomenon – the world’s largest sovereign wealth fund owned by a population of just 5.3m, accounting for a sixth of all SWF assets and the owner of 1.5% of all listed equities.

Put forward in 1983 as a way to store and diversify Norway’s North Sea oil bonanza, was it a device to protect the economy from being ruined by runaway inflation, or just an exercise in delayed gratification?

Either way, the oil fund has always been up for public debate. 

But recent shifts in its surrounding landscape such as COVID-19, the arrival of a high-profile hedgie to lead Norges Bank Investment Management (NBIM), not to mention its exponential growth, have intensified the chatter – on top of the ever louder clamour for action on environmental and ethical issues.

In mid-May, the budget decision to use more than the long-term real return of the fund for the second year running sparked concern.

Relative to the size of the Norwegian economy, the GPFG’s growth has been unfathomable, over the years turning it into a completely different proposition. In 2002, it was worth around a quarter of the country’s annual GDP, by 2019 it was more than three times.

Other countries have large SWFs, but Norway’s is one of the few owned by a democracy. 

For all the controversy around his hiring, chief executive officer Nicolai Tangen could prove to be the pressure valve that’s needed – just the right personality at just the right time. At pains to portray himself as approachable, he has emphasised communication as one of three key priorities – externally as well as internally.

“The more that people know about the fund, the more faith they will have in us,” he said.

The GPFG may not a political instrument, but it cannot avoid being a focus of political debate.

Rachel Fixsen,
Nordic correspondent
rachel.fixsen@ipe.com