New mandate for management of Government Pension Fund Global

The Ministry of Finance has laid down the new mandate for Norges Bank's management of the Government Pension Fund Global (GPFG). "The new mandate will provide better risk management in the Fund, more transparency and a more uniform framework," says Minister of Finance Sigbjørn Johnsen.

As previously announced the Ministry has been working for some time on a review of the management framework for the Government Pension Fund Global. One of the starting points for this review has been to elucidate the division of responsibilities and roles between the Ministry of Finance and Norges Bank, along with imposing stricter requirements for regulating risk management.

The new mandate is broader than the three sets of rules it replaces (regulations, guidelines and management agreement). The mandate regulates areas that the current framework does not cover, and the provisions are more comprehensive.
"In line with the Norwegian Parliament’s (the Storting’s) view I have emphasised that the regulation of the GPFG should continue to be framework-based, so that Norges Bank must fill out the general framework and principles with more detailed internal regulations for the operational management. This is an arrangement that works well. Micromanagement by the Ministry is neither possible nor desirable," says the Minister of Finance.

The mandate is based on the main principles described in the report on the management of the Government Pension Fund in 2009 submitted earlier this year, and which a broad majority of the Storting has endorsed. This includes requirements that the Bank is to establish risk limits for more categories of risk than at present. The starting point of the new reporting requirements will be the greatest possible degree of transparency within the limits defined by a sound execution of the management assignment.

"The new mandate does not entail any changes in the strategy for investing Fund assets, but will ensure a better framing of risk management," says Minister of Finance Johnsen.

The Ministry of Finance has previously notified that from 2011 rules will be introduced for salary, bonus and other compensation for the financial sector in Norway. "The same rules on compensation should apply also to Norges Bank's management of the Government Pension Fund Global," says the Finance Minister. "Specific remuneration provisions will be incorporated in the mandate as soon as the Ministry has adopted the regulations on compensation in the financial sector."
The new mandate enters into force on 1 January 2011.

Read the mandate here

 

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The mandate has been updated. For the correct version, click here.

Updated: 19. october 2011