OSLO Oct 5 Norway may tighten guidelines for
spending cash from its $890 billion sovereign wealth fund, the
world's largest, Prime Minister Erna Solberg told public
broadcaster NRK on Wednesday.
Changing the country's fiscal spending rule, in place since
2001, would be a major policy departure. Until now, any
suggestions of changing the rule have been rejected by
successive prime ministers.
Under the current rule, governments can spend an average 4
percent of the wealth fund per year, but ultra-low global
interest rates and other market conditions make it unlikely that
the fund can earn returns of this magnitude, economists say.
Speaking on the eve of the government's 2017 budget
presentation, Solberg defended a surge in spending in recent
years to combat rising unemployment and sluggish growth, but
added the question of long-term return must be addressed.
"This is the big discussion we're going to face: following
up the question of a new, tighter rule in the time to come," the
Conservative premier said. She did not say when a decision could
be made and whether it would come before or after the next
general election, due in September 2017.
Despite the sharp rise in public spending, Solberg's
right-wing government aims to spend only 2.8 percent of the fund
in 2016. Future spending projections show that Norway faces a
big rise in pensions and health-related costs, however.
The sovereign wealth fund invests the proceeds from Norway's
revenues from oil and gas production in foreign stocks, bonds
and real estate. Its value corresponds to about $170,000 for
every Norwegian man, woman and child.
(Reporting by Terje Solsvik; editing by Mark Heinrich)