NORWAY – The Norwegian government plans to spend NOK148.5bn (US$26.7bn) of the Government Pension Fund – Global's assets to help spur economic growth, the Ministry of Finance said as it unveiled its proposed 2010 budget yesterday.
"The extraordinary escalation in the spending of oil revenues to deal with the financial crisis and the global recession has brought spending of petroleum revenues to a high level," the Ministry wrote in the national budget.
The Ministry of Finance is allowed to funnel the Pension Fund's returns, targeted at 4% per year, into the wider economy but the government is allowed some leeway depending on economic conditions. In 2010, the government plans to exceed the expected return by NOK44.6bn.
"The room for further increases in spending is small. This underscores the need to quickly return to the 4% trajectory as growth recovers and the outlook improves," the budget reads.
As a percentage of gross domestic product, the use of oil revenues in the coming year is 2.3 percentage points higher than the return of the Pension Fund, also known as the Oil Fund.
This is the second consecutive year of increased spending of oil revenues. The 2009 budget, touted as the most expansionary budget in the past 30-years, also called for the government to surpass the 4% spending limit. (Global Pensions; May 18, 2009)
Assets in the pension fund are expected to reach NOK2.8trn by the end of 2010.
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