New Record in Oil Money Spending in Norway

Photo : Magnus Fröderberg -Norden | Finance Minister Siv Jensen Finance Minister Siv Jensen.

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Every year Norwegian government can use up to 4 percent of 895-billion-USD-valued Government Pension Fund ( aka oil fund) in the annual budget. But rarely, the governments use more than 3 percent. However, next year, the government will use a record amount of money from the fund with extra 20 billion NOK, that will make 225 billion NOK, according to various estimates from Statistics Norway (SSB), DNB Markets and Nordea Markets.

According to Aftenposten, the government will take out a little more than 3 percent of the oil fund’s value next year.

The guidelines for using the oil spending suggests that no more than 4 percent of the fund can be used in the national budget.

Professor Øystein Thøgersen at the Norwegian School of Economics (NHH) warns the government against using more oil money.

Talking to NTB, he says he is afraid of a situation where Norway for a long time shows too much dependency on the oil money. Thøgersen believes that the fiscal stimulus should be between 0.1 and 0.2 percent.

The fund’s market value increased by 98 billion kroner to 7,177 billion kroner in the second quarter of 2016. Equity investments had a market value of 4,275 billion kroner, while the value of fixed-income investments was 2,681 billion kroner. Investments in real estate had a market value of 221 billion kroner.

In the second quarter of 2016, the fund returned 94 billion kroner. There was a withdrawal of 24 billion kroner by the government. Fluctuations in the krone led to an increase in the fund’s value of 28 billion kroner. More on the fund’s return

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