The development exposes the scale of the economic damage done by the twin crises of Covid-19 and a collapse in global oil markets
Norway plans to draw a record 382 billion kroner ($37 billion) from its wealth fund, forcing the world’s biggest sovereign investor to embark on a historic asset sale to generate cash.
The unprecedented withdrawal, revealed in Norway’s Revised Budget for 2020, is more than four times the previous record set in 2016.
The development exposes the scale of the economic damage done by the twin crises of Covid-19 and a collapse in global oil markets, with western Europe’s biggest crude exporter now facing its worst economic slump since World War II.
For the first time, Norway’s government is set to withdraw considerably more than the $1 trillion fund generates in cash flow from dividends and interest payments. That income is assumed in the Budget to be 258 billion kroner this year, meaning asset sales could reach 124 billion kroner, or $12 billion.
“It’s obviously an historic event,” SEB Chief Strategist Erica Dalsto said. “This illustrates the double-whammy that’s hit the Norwegian economy, with repercussions from both containment measures and the oil-price collapse.”