Norway should tighten spending rule on its wealth fund, says IMF
Under the fiscal spending rule, governments can spend in their budgets an average 4 percent of the wealth fund per year - the estimated long-term return of the fund.
The sovereign wealth fund, the world's largest, invests the Norwegian state's revenues from offshore oil and gas production It invests up to 60 percent in equities, 35 percent in fixed income and 5 percent in real estate. It cannot invest in Norway.
"The fiscal rule's 4-percent target is no longer appropriate," the IMF said in a statement after visiting Norway, and recommended a spending target of about 2.5-3 percent.
"The fact that (the fund) has been growing much faster than the economy has allowed increased spending of oil revenues as share of mainland GDP," it said.
When it was set up 20 years ago, the fund was half the size of Norway's GDP. It now is 2.5 times the size. ■