Oslo: When times get tough, it never hurts to have 700 billion euros stashed away like Norway does in the world's biggest sovereign wealth fund to cushion the blow of plunging oil prices.
Oslo has prudently tucked away most of its oil money since the 1990s in order to be able to finance its generous welfare state indefinitely.
Invested in stocks, bonds and real estate, the fund is now worth around 6.96 trillion kroner (734 billion euros, $794 billion), equivalent to around six annual budgets or more than 137,000 euros for each of the country's 5.2 million inhabitants.
"We sold a lot of oil when the prices were high and saved a lot of the money we received," explained Ragnar Torvik, economics professor at the Norwegian University of Science and Technology in Trondheim.
"As a result, the Norwegian economy is well-equipped to withstand a drop in the oil price seeing as the latter has little impact on public finances," he added.
But it is strictly forbidden to touch the riches in what Norwegians call both the "oil fund" and the "pension fund" with governments only allowed to tap the returns, estimated at around 4.0 percent, and not the capital.
The sums at the authorities' disposal swell as the fund continues to grow, fuelled by new oil revenues and the return on investment. And it has even grown so fast the current rightwing government only intends to use 2.8 percent of its nest egg for 2016.
AFP
