Norway to tap Oil Fund for budget deficit

The additional funds, which will come from the Government Pension Fund-Global, is one of a number of measures in what the Ministry called the most expansionary fiscal budget in over 30 years.

The Ministry now plans to spend NOK130bn in oil revenues in calendar year 2009, NOK39bn more than the expected return of the pension fund, often called the Oil Fund.

Fiscal policy allows the government to use 4% of the Global Fund's assets over time, the expected real return of the fund, to shore up a budget deficit. But with the economic pressures, the government is using 5.7%, Ministry spokesman Anders Lande said.

He said the policy allows the government to exceed the 4% limit during a downturn with the expectation that it would spend less than that during good times.

The Norwegian government invests the revenues it receives from exporting oil and natural gas in the Oil Fund to secure future public pension obligations and other budgetary needs.

The government expects petroleum investments to remain high in 2009 and still expects a surplus of NOK237.4bn to go into the Oil Fund.

The Ministry estimates total assets in the Oil Fund to reach NOK494bn at the end of 2009.