Norway Eases Off Dipping Into World’s Biggest Piggy Bank
Date posted: 22.05.2018
Category: Accounting / Financial
Norway expects to withdraw less from its giant sovereign wealth fund this year as a recovery in oil prices is boosting the country’s coffers.
Western Europe’s biggest oil and gas producer is turning the page on the oil industry’s deepest downturn in at least a generation after output cuts from OPEC and others, coupled with geopolitical tensions, have supported a recovery in crude prices.
The government on Tuesday reduced the amount of oil wealth it intends to spend in 2018, at the same time as higher income from petroleum production means it will have to cover far less of that amount with withdrawals from its $1 trillion wealth fund.
The government expects to withdraw 21.1 billion kroner ($2.6 billion), down from the 72.3 billion it forecast when it presented its first budget in October, according to revised-budget figures obtained by Bloomberg and confirmed by official documents published Tuesday. That is down from as much as 87.7 billion kroner in 2016, the first year ever Norway had to dip into its piggy bank since setting up in the 1990s.
Yet the forecast still contrasts with fiscal accounts
published earlier this month that showed monthly withdrawals had ceased. The new estimate is based on an oil-price assumption of 519 kroner ($65) a barrel for 2018, which could prove conservative. Benchmark Brent has averaged about $69 a barrel so far this year, and is currently trading at $78.7 a barrel, the highest level since 2014.