Norway to cut sovereign wealth fund spending amid soaring costs


Norway to Cut Sovereign Wealth Fund Spending Despite Skyrocketing Costs |  Photo credits: TimOve / Creative Commons

Norway to Cut Sovereign Wealth Fund Spending Despite Skyrocketing Costs | Photo credits: TimOve / Creative Commons

OSLO, September 19 (Reuters) – The Norwegian government will face huge budget spending next year but without dipping into its sovereign wealth fund to cover the deficit as it could lead to higher inflation and interest rates , said the Ministry of Finance.

The Norwegian sovereign wealth fund, the largest in the world with nearly 1.2 trillion euros in assets, invests the products of the Norwegian oil industry in foreign stocks and bonds. The state aims to spend no more than 3% of its value in a normal year.

“Spending of oil revenues must be reduced out of concern for the economy and high inflation,” the finance ministry said on Sunday.

“Increased oil revenue spending would put additional upward pressure on inflation and the path of interest rates, which in turn could lead to higher unemployment.”

Government income from taxes and other sources outside the oil industry will increase much less, while projected costs for hosting refugees, public construction projects, financing electricity for households will increase by some 100 billion crowns (9.28 billion euros) in 2023, compared to 2022, creating a budgetary gap, adds the ministry.

The Norwegian government will unveil its plan to close this gap when presenting the budget for the year 2023 on October 6. (1 euro = $0.9979) (Report Terje Solsvik, French version Lina Golovnya, edited by Kate Entringer)





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