Soaring oil prices swell Norway’s surplus

The Norwegian government pointed to the strength of the national economy on Tuesday in presenting a revised 2012 budget with a larger surplus, but it revised down growth prospects for the year.

"Economic activity in Norway has held up well in 2012, despite the global economic slowdown," Finance Minister Sigbjørn Johnsen said in a statement.

In its revised budget, Norway's left-leaning government therefore adjusted upwards its anticipated surplus for the year, including oil and gas revenues, by nearly 36 billion kroner ($6.1 billion) to a total of 381.3 billion kroner.

Not counting its oil and gas sector, the country's budget deficit for 2012 was now seen slipping to 112 billion kroner, from a previously anticipated 122.2 billion.

The finance ministry explained the adjustments by soaring oil prices, as well as higher-than-expected tax revenues and lower-than-expected expenditures.

To avoid an overheating of its economy, which in turn could push up the value of the krone to the detriment of Norwegian industries, the ministry prescribed drawing less than the approved amount from Norway's so-called oil fund.

The fund — one of the biggest sovereign wealth funds in the world — contains all state revenues from the country's oil and gas sector and was at the end of 2011 valued at 3,971 billion kroner.

Norway has set a 4-percent limit on the amount that can be tapped from the fund each year to balance its budget.

The finance ministry said on Tuesday that due to rising oil prices it in 2012 would need to draw just 116 billion kroner from the fund, which is 16 billion below the 4-percent path and 6 billion less than the approved amount last year.

Not counting the oil and gas sector, Norway's economy is now expected to grow 2.7 percent this year, down from the estimate in the autumn budget of 3.1 percent.

"Next year a further pick-up is expected to 3.0 percent," the finance ministry said, adding that Norway's unemployment was expected to remain low, at 3.25 percent this year.

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