The Strategist

Norway is Ready to Unseal its Oil Fund

08/12/2015 - 15:33

Norway is ready to use its oil accumulation in order to support the economy and stop the growth of unemployment in the background of the sharp fall in oil prices.

European Commission
European Commission
As stated by the Prime Minister of Norway, Erna Solberg in an interview with Bloomberg, the authorities are preparing a draft budget for the following year taking into account the use of the $ 875 billion sovereign wealth fund, which should help provide jobs and alleviate the economic crisis of the largest oil and gas producer in Western Europe.

According to Solberg, the expenditure part "of the budget next year will be even more than this, and will focus on the transformation in the Norwegian economy, the issues of competitiveness and the fight against unemployment."

The Norwegian Government does not call the situation a crisis, but the slowdown in the economy may cut more jobs than were lost during the financial turmoil in 2008.

The country is preparing for the biggest decline in investments in the oil sector since 2000, and oil companies have already cut more than 20 thousand jobs. Unemployment in Norway reached a 11-year high of 4.3%, but still significantly lower than in most European countries.

The weakening of the krone had a positive impact on the economy of Norway, which for the past 12 months fell by 9% against the euro, supporting the tourism industry and local exporters.

However, according to Solberg, Norway has to have something more than just a weak currency to free themselves from dependence on oil.

The authorities intend to implement tax reform to increase the attractiveness of the Norwegian investors, she said.