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In a sign that the Norwegian economy and its oil industry are doing much better at the current higher oil prices, Norway’s finance ministry made in June its first deposit into the huge US$1-trillion sovereign wealth fund, the world’s biggest, since early 2016.
According to the Norwegian Government Agency for Financial Management, the finance ministry deposited US$233 million (1.9 billion Norwegian crowns) into the fund in June, thus reducing this year’s withdrawals to US$967 million (7.9 billion crowns), Bloomberg reports.
The Norwegian fund, created in 1990 to manage the country’s huge oil revenues and support the government’s long-term management of petroleum proceeds, hit the US$1-trillion value threshold last year.
In early 2016, at the height of the oil price slump, Norway tapped its fund for the first time since it was created in the 1990s, as plunging oil prices battered the economy and oil industry of Western Europe’s biggest oil and gas producer.
The Norwegian economy has recovered from the downturn caused by the 2014 oil price crash and is now characterized by optimism and solid growth, Norway’s government said in May this year when it unveiled the country’s revised budget for 2018.
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The US$1-trillion Government Pension Fund Global recommended last year the removal of oil and gas stocks—more than US$35 billion worth of shares—from the fund’s equity benchmark index to make Norway’s wealth and economy less vulnerable to a permanent drop in oil and gas prices. The oil and gas sector accounts for about 4 percent of the fund’s investment in equities.
Earlier this year, the fund—which is invested in more than 9,000 companies worldwide and owns 1.4 percent of listed companies around the world and 2.4 percent of all listed companies in Europe—won support from top Norwegian economists and academics for its plan to dump oil and gas stocks.
This non-binding support from Norway’s top universities is part of the process of hearings and consultations on the proposal to divest from oil and gas stocks. It moves the fund closer to possibly implementing its plan. The Norwegian government aims to reach a final decision on the proposal in the fall of 2018.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.