| Most of the surplus is due to the trade balance rather than the income earned from the assets held abroad by Norway’s sovereign wealth fund. The fund produces a large cash flow in absolute terms, but those receipts are far smaller than the export earnings from oil and gas. At the current oil price of about 400 krone per barrel, the government no longer runs a budget surplus and can’t add to the sovereign fund’s holdings: “measured as a share of GDP, the GPFG may have already reached the peak.”
If oil prices don’t rebound and the sovereign fund continues to earn around 3 per cent in real terms each year, Olsen thinks fiscal policy will have to be tightened significantly to offset the decline in petroleum revenues...............................................Full Article: Source
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