May 15, 2018 / 6:12 AM / a year ago

Norway cuts spending from wealth fund as economy thrives

OSLO, May 15 (Reuters) - Norway will spend less money than planned from its $1 trillion sovereign wealth fund in 2018 as growth accelerates and state income rises, the government said in its mid-year budget revision on Tuesday.

A sharp rise in the price of crude has helped trigger an economic recovery for western Europe’s top oil and gas producer as energy firms boost exploration and investments.

Norway’s structural non-oil deficit, a key measure of public spending, is now estimated at 225.5 billion Norwegian crowns ($28.10 billion), down from 231.1 billion crowns seen last October.

The revised plan corresponds to an estimated 2.7 percent of the oil fund’s value, down from 2.9 percent in the original budget plan and below the 3.0 percent that Norway aims to spend in a year of average growth.

Statistics Norway separately released growth data that showed the country’s non-oil gross domestic product expanded by 0.6 percent in the first quarter from the fourth, beating forecasts of 0.5 percent growth in a Reuters poll.

The government maintained non-oil growth forecasts of 2.5 and 2.6 percent for 2018 and 2019 respectively, well above the 1.8 percent growth recorded in 2017, the finance ministry said in a statement.

$1 = 8.0258 Norwegian crowns Reporting by Terje Solsvik and Camilla Knudsen, editing by Gwladys Fouche

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