Last year Norway made headlines around the world as the country’s sovereign wealth fund had effectively made every Norwegian a millionaire thanks to its huge financial reserves collected from oil and gas extracted from the North Sea and reinvested it wisely for the good of the people.
For many years the Norwegian sovereign wealth fund, recognised as the world’s largest sovereign wealth fund, has stood as a shining example of good governance and fiscal responsibility. With stakes in nearly 10,000 companies around the world, which is said to average out at 1.3 per cent of every group listed on a stock market globally, the fund is immense.
However that being said, with global oil prices tumbling, Norway might have to dip their hands into their USD875 billion fund. According to Bloomberg, Norway’s Prime Minister Erna Solberg, is working on the country’s 2016 budget with the backing of the country’s sovereign wealth fund to help secure jobs and weather the financial downturn that had been brought on by cheap oil.
Norway is Europe’s largest oil and gas producer, with much of its economy dependent on the oil and gas industry. With the biggest slowdown in oil and gas investments since 2000, and the loss of more than 20,000 jobs, Norway is looking to improve their economic competitiveness and reduce the country’s highest unemployment rate in at least 11 years. Dipping into the fund would be a historical step for the country.
That being said the Norwegian sovereign wealth fund was created to help future generations adapt themselves for the day when the oil in the North Sea finally runs out. However with the current economic situation, Norway would be withdrawing their krone from the fund several decades earlier than expected, raising the question of whether this will be a temporary measure, or if the fund would be put to its intended purpose well before its time.