As its currency slumps, Norway is considering withdrawing from its massive sovereign wealth fund, reported Bloomberg.
Long reliant on high energy prices, the Scandinavian country has seen government tax revenues from petroleum fall 42% from last year.
“We have reached a point where we will from now on see that the oil-corrected balance will be above the cash flow — that’s based on oil prices increasing slowly in the future,” said Kyrre Aamdal, a senior economist at DNB ASA in Oslo. The move to withdraw from these massive reserves wasn’t expected for “several more years,” Aamdal said.
Analysts had worked out Norway’s budget to include projections for oil to be trading at roughly $69 per barrel, but it’s currently hovering at less than $55, a drop of nearly 30%.
The government is currently running a deficit of about $22b, a record for the country. Norway’s national currency—the Kroner—is down about 13% this year, a spectacularly bad for performance for the historically stable unit.
Market Watch noted that the country is aggressively combatting a slowdown in the economy by slashing taxes by some $1b.
“The 2016 fiscal budget will help dampen the macroeconomic effects of the decrease in activity in the petroleum sector, while allowing for necessary structural adjustments,” said the Norwegian Minister of Finance, Siv Jensen.