Norges Bank sees $1.28 billion loss

The Norges Bank made a NKr 7.6 billion ($1.28 billion) deficit in 2009, accounts released Thursday showed.

The central bank, which ran a surplus of Nkr 3.3 billion in 2008, put the deficit down to foreign exchange reserve losses due to the appreciation of its currency, the krone. The currency has gained 11.4% against the euro over the past year, going from €0.1114 last March to €0.1241 on Thursday.

As a result of the loss, the central bank said it cannot afford to transfer funds from its adjustment fund to the country's Treasury.

The adjustment fund, which, this year, amounts to NKr 51.3 billion, contains provisions to act as a buffer against changes in exchange rates and the prices of securities. When the Norges Bank makes a profit, it channels money into the fund until it equals 5% of the central bank's holdings of Norwegian securities and 40% of its net foreign exchange reserves, minus its immunisation portfolio, claims and liabilities overseas, and the capital it manages for the sovereign wealth fund, Government Pension Fund- Global. Once these provisions have been covered, the excess is put into a transfer fund, one third of which goes to the country's Treasury at the end of each year.

Interest income and dividends from foreign investments came to Nkr7.3 billion, Nkr 5.3 billion lower than the previous year.

The central bank said that substantial swings from surplus to deficit or vice-versa were not uncommon, noting its surplus last year.

Click here to read the central bank's statement