Norway Boosts Withdrawals From World's Biggest Wealth Fund

  • Monthly withdrawal rises to NOK7.4 billion from NOK6.7 billion
  • Fund has said investment income can cover withdrawals

Norway increased withdrawals from the nation’s wealth fund again in March, running ahead of estimates made by the central bank just two months ago.

The government withdrew 7.4 billion kroner ($898 million), according to monthly data published by Norwegian Government Agency for Financial Management. That’s up from 6.7 billion kroner in each of the first two months of the year, bringing the year-to-date withdrawals to 20.8 billion kroner.

At the faster pace, full-year withdrawals would top an estimate of 80 billion kroner given in February by the central bank governor, who oversees the $860 billion fund. The government of western Europe’s biggest crude producer is dipping into its piggy bank to meet budget needs amid plunging oil prices.

Still, unlike wealth funds across the Middle East and central Asia, officials overseeing Norway’s fund say the investor won’t need to sell assets to meet growing fiscal needs. It has said it can cover withdrawals with dividends and interest payments of about 200 billion kroner annually it makes from its holdings in equities and bonds. Still, withdrawals mean the fund’s strategic shifts will be slowed down and could become more costly.

In its initial 2016 budget, the government had planned to withdraw about 5 billion kroner.

The signal for increased fiscal stimulus may be well received by the central bank, which last month cut its benchmark rate to a record low of 0.5 percent and said it was prepared to ease further.

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