Chart of the week: Norway taps its piggy bank

Norway's sovereign wealth fund

Saudi Arabia isn’t the only nation struggling following the oil-price slide, says For the first time since Norway set up its sovereign wealth fund in 1996, the state has tapped it to cover some public spending.

It took out $5.4bn in the first half of the year, and is set to withdraw another $20bn in the second, a sum worth around 18% of overall government spending, which in turn accounts for 60% of the $375bn economy.

This is still under the 4% annual withdrawal limit ($36bn), which may be cut, given the difficulty of earning a decent yield these days.


“The problem with being too data dependent [is that] volatile economic indicators rarely strengthen synchronously to present the perfect opportunity [to raise interest-rates]. Imagine if the Fed waited for payrolls above 150,000, manufacturing ISM higher than 52 [50 signifies expansion], core inflation above 1.5% and real consumption expenditure, bank lending and construction spending to be growing faster than their long-term averages before pulling the trigger. The 2004-2006 cycle would have seen half the number of rate hikes. Meanwhile, only four rate increases would have materialised throughout the roaring 1990s.”

Deutsche Bank