The budgetary rule

The budgetary rule

The budgetary rule (Norwegian: "handlingsregelen") is a rule concerning the usage of capital gains from The Government Pension Fund - Global of Norway. The rule was introduced in 2001 by the First cabinet Stoltenberg to ensure that that the sovereign wealth fund, with a vast majority of its dealings related to activities in the petroleum industry, would secure sustainable development for the future generations of Norway. The budgetary rule will thereby continue to yield in the future, even when the petroleum resources of the North Sea and other operational areas come to an end.

The rule states that a maximum of 4% of the fund's yield should be allocated to the yearly government budget. Disregarding the future petroleum income, the fund will still remain an important budgetary source of revenue. As of today, with the value of the pension fund increasing every year, the rule will secure even better conditions for today's and future generations. A broad majority of the political parties in Norway have agreed to comply with this fixed percentual usage.

The rule was partially intended to avoid a state of "Dutch disease".


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