Annual Address - Chart 12
The increase in oil production in recent years will lead to a bigger government budget surplus providing that the government's other revenues and expenditure (excluding pension disbursements) remain unchanged as a share of GDP. The size of the deficit will depend on the oil price, but is expected to peak in 7-9 years irrespective. During this period, the return on the Petroleum Fund will account for a growing share of total government revenues. An increase in pension disbursements through the National Insurance Scheme will gradually reduce this surplus. The calculations are based on long-term projections of oil production and pension disbursements in the National Budget for 1999 and population projections from Statistics Norway. These are based on an annual productivity growth of just over 1 per cent and a real return on the Petroleum Fund of 4 per cent.