*Just As FG Withdrew $150m From Nigeria’s SWF To Augment FAAC…
By Hamilton Nwosa(Head, The New Diplomat’s business and data tracking desk)
Norway, the oil-rich Scandinavian country is moving energetically to boost her economy in the face of looming global economic crisis following plummeting Oil prices and Covid-19 pandemic, with a humongous withdrawal of US $41 billion ( put at about 416.6 billion Norwegian kronor) from her Country’s Sovereign Wealth Fund(SWF).
Recall that Norway which has the unmatched record of having the world’s largest sovereign wealth fund of over US $1-trillion Oil fund in consolidated savings is said to have concluded plans to withdraw US $41 billion from this massive SWF to reposition her economy following the ravaging effects of COVID-19 and crashing oil prices at the global market.
Quoting energy reports, analysts maintain that Norway, Western Europe’s largest oil producer, whose wealth fund projected at more than US$1 trillion saved from petroleum trading revenues for decades, making her the single country in the world with the largest Oil savings especially in terms of possessing the highest SWF global assets, has also broken a world record of planning to effect such a massive withdrawal at a go.
Experts say this move is to boost Norway’s revised budget for 2020, “which calls for using US$41 billion (419.6 billion Norwegian crowns) from the fund. This sum would account for 4.2 percent of the estimated value of the fund at the beginning of this year.”
“Increased spending has been a necessity in the current situation – both to avoid an even sharper downturn and to help healthy companies through the crisis so they can create jobs and growth when normal circumstances return,” Norway’s Finance Minister Jan Tore Sanner was quoted as saying Tuesday in a statement.
Recall that like Nigeria, Norway’s economy has been affected by the COVIID-19 pandemic, with the oil and gas sector facing severe stress with crashing price crisis compounding an already difficult situation.
“The downturn is amplified by the severe impact of the pandemic on surrounding countries and by a sharp fall in oil prices. Lower oil prices have contributed to weakening the krone exchange rate,” Norwegian top bank, Norges Bank explained in a statement Tuesday.
In line with OPEC countries and OPEC+ move to rally up oil prices and resolve global market glut, Norway has similarly cut its crude oil production by 250,000 bpd in June. Given this, the she estimates that her production would thereafter stay at 134,000-bpd lower rate for the remaining part of the year. Historically, this marks the first time since 2002 that Norway is embarking on oil production cut.
Recall also that The New Diplomat had recently projected that with escalating glut in oil supplies and stretched storage capabilities, exacerbated by Saudi Arabia’s increase in oil production even in the face of dwindling global demand, global energy experts had come up with grim outlook that the world may be heading towards Oil price crash as low as $17 per barrel in the coming weeks if urgent talks were not held.
For Nigeria, Africa’s most populous nation, whose externally generated revenue is about 97% dependent on earnings from crude oil, the grim outlook was further compounded by the recent downgrading of the country’s credit rating from stable to negative by Standard & Poor (S&P).
It would also be recalled that Nigeria’s Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed had disclosed that Nigeria may slide into recession if the Covid-19 crisis continues unabated for the next six months.
Last month, president Muhammadu Buhari had to approve a withdrawal of $150m from Nigeria’s Sovereign Wealth Fund to augment FAAC disbursements to the FG, States and Local government councils. The FAAC receipt, according to Finance Minister had depleted drastically because of COVID-19 coupled with severe crash in oil prices.
Experts say the problem confronting the country has its roots in Nigeria’s inability to save her petroleum revenues especially at a time when global price of oil per barrel surged to all time high during the administration of former president Goodluck Jonathan.
But some political analysts however countered that it was the Nigerian Governors Forum (NGF) that objected to saving oil revenue, and even threatened legal action against the federal government at the time.
