07:03 GMT +3 hours29 July 2016
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Norway Taps Its Oil Money ‘Piggy Bank’ to Cope With Economic Downturn

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The Norwegian government has announced that it has made its first withdrawal from the country's massive $826 billion sovereign wealth fund, which it had set up for a "rainy day," for the first time since it was set up 20 years ago, in an effort to counter an economic downturn.

Norway's government has made its first withdrawal from the country's $826 billion sovereign wealth fund, 20 years after first depositing cash from its vast oil sector into the account.

The withdrawal took place in January when 6.7 billion Norwegian kroner ($780 million) was used to pay for public spending, according to the local newspaper Dagens Naeringsliv. 

Norway has sharply raised its annual budget spending to counter an economic downturn triggered by falling oil industry investments, as the price of North Sea crude has fallen by 70 percent since mid-2014.

The mining and manufacturing sectors, which are closely linked to production in the oil and gas industries, have also declined.

The $826 billion wealth fund, called the Government Pension Fund Global, was set up twenty years ago, in 1996. Its purpose is to share the wealth from the country's oil and gas production with future generations. The fund is invested abroad in stocks, bonds and real estate.

In October, the government warned that it would resort to tapping into the fund to cover holes in its budget and stimulate the economy.

Some experts predict that this year is set to be critical for Norway, western Europe’s largest oil producer and exporter, as it expects to make use of its rainy-day fund sooner than planned.

Until now, the government has pumped nearly 200 billion kroner a year into the fund on average. But this year, it may spend as much as 80 billion kroner from the wealth fund’s returns, according to Norway’s central bank.

Norway is not the only oil producer to turn to its wealth funds for resources amid falling oil revenues. Some of the world’s biggest investors will have less money on hand to prop up global markets. Norway's Sovereign Wealth Fund is one of the largest national funds in the world from a per capita standpoint, as the population of the country is just over 5.08 million.

Related:
Falling Oil Prices Spell Bad Omen for Norway
Norway Starts Development of Largest Offshore Oil Field
2008 Was a Walk in the Park, But $50 Oil is Norway's Worst Nightmare
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oil fund, revenue, budget, oil prices, Norway, Europe
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  • Mikhas
    The Norwegian inbreeds can always return to fishing cod and dig up their reserves of "Rakfisk", rotten cod and make "Raspeballer", along with that, if they´r lucky , if their "partnership" with the Eurofags didn´t destroyed that too, for them.

    You know, in between running errands for the US (NATO) , like whipping up Russophobia on every-day national television and sabre-rattling their neighbour- Russia, painting cross-hairs all over them. The safety of the US means everything to these guys, even to he price of national suicide and ruining relations with those who matter. The Eurofags are doing it too, jumping around on one foot while shooting themselves in the other. Not that it pay´s, why would it? The Nazis didn´t pay anything either, but for the sake of it...
  • aubreydgarrett
    The closer Norway embraces NATO the quicker the depletion of their sovereign wealth fund.
  • michaelin reply toaubreydgarrett(Show commentHide comment)
    aubreydgarrett, I'm afraid that you may very well be right with that call.
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