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Norway boosts oil money spending to back recovery amid oil slump

Thursday, October 6, 2016 - 13:51
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Norway's government will next year add to record spending of its oil income, withdrawing cash from its massive US$890 billion sovereign wealth fund to protect the economy against a slump in the nation's oil industry.

[OSLO] Norway's government will next year add to record spending of its oil income, withdrawing cash from its massive US$890 billion sovereign wealth fund to protect the economy against a slump in the nation's oil industry.

The government will unveil its 2017 budget at 10am local time. It's expected to boost its so-called structural oil corrected budget deficit - or oil money spending - from the record 206 billion kroner (S$35.3 billion) this year. Still, as the oil market is now showing signs of exiting the crisis, the actual stimulus to economy will probably fall from the 1.1 percentage point impulse unleashed this year.

"The budget will be somewhat tighter," Finance Minister Siv Jensen said outside her home in Oslo early Thursday morning. "But it's too early to celebrate, it's important to target new jobs."

The economy is seeing "bright spots" and unemployment may have peaked, she said. The budget will be well adapted to the economic situation, Ms Jensen said.

The oil money spending will rise to 225 billion kroner next year, national broadcaster NRK reported early Thursday, citing the budget.

The minority government needs backing from the smaller Liberal Party and the Christian Democrats to pass the budget. They have also signalled that oil money spending is reaching its limits.

BLOOMBERG