Norway eyes curb on sovereign fund withdrawals
Norway on Thursday proposed to curb the amount of money it can withdraw from its sovereign wealth fund, the largest in the world, amid lower expected returns.
The minority right-wing government also recommended that the fund, worth 7.5 trillion kroner (847 billion euros, $903 billion), increase the share of equity from 60 to 70 percent. At its current value, this would amount to buying close to 85 billion euros worth of shares.
The government lowered its expected real rate of return to three percent of the fund's value a year, down from four percent.
This would in practice limit the government's room for maneuvre: when tapping the fund to balance its budget, it cannot exceed the expected return.
"The backdrop for this downward adjustment is the prospect of lower returns on international financial markets," Prime Minister Erna Solberg told reporters in Oslo.
Set up in the 1990s, the public pension fund is, despite its name, intended to finance the future expenses of the welfare state by growing the country's oil wealth.
But the state's oil revenues, which fuel the fund, have been hit by falling hydrocarbon prices since mid-2014, which come on top of a decline in production since peaking in 2000.
In 2016, the government for the first time took more money out of the fund than it put in.
In addition to the 60 percent in shares, rules require 35 percent of the fund to be invested in bonds and five percent in real estate, all of which must be outside Norway to avoid overheating the national economy.
The announced proposals will be detailed in documents presented to the parliament on March 31. They will require the backing of the parties to reach a majority.