Norway's Withdrawals From Sovereign Wealth Fund Now Falling Fast

(Bloomberg) -- Norway’s government is cutting withdrawals from its sovereign wealth at a faster clip than estimated amid rising oil prices and falling unemployment.

The government withdrew just 2.5 billion kroner ($312 million) in August, down from more than 10 billion kroner at the start of the year, according to monthly figures from the Norwegian Government Agency for Financial Management. Through August it has taken out 47 billion kroner and is now on track to miss the 71.5 billion kroner it has estimated it would withdraw for 2017.

Pressure on Norway’s massive piggy bank, which hit $1 trillion last month, is abating as the economy of western Europe’s biggest petroleum producer recovers from the crash in oil prices in 2014. Unemployment peaked in the middle of last year and has again fallen to close to 4 percent. 

Tens of thousands of jobs were lost in the oil industry during the deepest downturn in a generation and falling oil income prompted the center-right government to last year dip directly into the wealth fund for the first time, taking out about 90 billion kroner. In the original budget for this year the government estimated that would rise to 121.2 billion kroner, but in May that was revised down to 71.5 billion kroner.

The government of Prime Minister Erna Solberg, reelected last month, is now preparing to become more moderate with its oil spending after a record binge over the past three years.

--With assistance from Stephen Treloar

To contact the reporter on this story: Jonas Bergman in Oslo at jbergman@bloomberg.net.

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Tasneem Hanfi Brögger