Norway to tap oil fund as revenues plummet

Norway to tap oil fund as revenues plummet
Norway's Troll oil platform, commissioned in 1995. Photo: Håkon Thingstad/Flickr
Falling oil revenues will see Norway delve into its massive sovereign wealth fund -- the world's largest -- to balance its books next year, according to budget plans unveiled on Wednesday.

According to the plans, the minority conservative government will need to take out around 3.7bn krone ($450m) from the fund, which is currently estimated at some $830bn.

Prices of crude have collapsed in recent months, cutting Norway's tax receipts from petroleum extraction activities and dividends by some two fifths, leaving a hole in the 2016 budget.    “We had expected this … to occur later, around 2020. But it has happened earlier thanks to the fall in oil prices,” DNB financial services group economist Kyrre Aamdal told AFP.

“This is a milestone — but it is not of great importance as the fund should continue to grow,” he added.

By the end of next year, the fund — whose role is to pay for future welfare spending and pensions — is set to top 7.449 billion krone (804 billion euros/$904 billion), up from 7.025 billion.

Earlier this year, Norway's central bank indicated that government transfers to the fund could be threatened once oil prices slid below some $60 per barrel.

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