(Bloomberg) -- Norway has stopped dipping into its $1 trillion wealth fund after fending off the biggest downturn for its oil industry in a generation.
Data show that the government for the first time since it started withdrawals from its massive piggy bank in 2016, refrained from taking out any cash in both February and March. Just as recently as October, the government had estimated it would need to withdraw 72 billion kroner ($9 billion) this year to cover budget holes.
Withdrawals have come to a quick halt as the price of oil has risen more than anticipated and as Prime Minister Erna Solberg prepares to temper a record spending spree over the past four years. It will be a relief to the fund, which has struggled to keep up returns amid record low interest rates, giving it more money as it expands its holdings of stocks and wider freedom to snap up more real estate.
In its budget for this year, released in October, the government anticipated the price of Brent crude would average $55 per barrel this year, far below the current level of $73. Unemployment in Norway has also subsided quickly from a peak in 2016. It’s now below 4 percent again, boosting tax revenue and damping the need to spend.
The government will release its revised budget for this year on May 15.
The wealth fund’s chief executive officer, Yngve Slyngstad, last week flagged that the withdrawals were coming to an end. With a recovery in oil prices and rising petroleum income for the government, it’s “obviously possible” that 2018 could be the first year since 2015 to yield a net deposit of cash into the fund, he said.
The fund has been able to handle withdrawals with few problems over the past years, using its roughly 200 billion kroner a year in income from dividends, bond interest payments and rent on real estate.
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