Norway’s oil investments set to drop again in 2017

Govt to regulate SWF tax exposure

OSLO, May 26, (Agencies): Oil investments, one of the main drivers of Norway’s economy, are expected to fall for a third straight year in 2017 as companies feel the pinch from weak crude prices, Statistics Norway said Thursday.

Preliminary estimates based on a survey of oil companies showed they were set to invest 153.2 billion kroner (16.5 billion euros, $18.5 billion at current exchange rates) next year, down by 7.6 percent from the 165.9 billion expected this year.

The estimates are tweaked throughout the year and may change.

The new data suggest however that the rate of decline is slowing, with this year’s drop expected to be 14.8 percent.

The figures are slightly lower than those of the Norwegian central bank.

Since December 2014, the bank has cut its key interest rate four times, slashing it to 0.5 percent in a bid to kickstart the country’s economy, which has been hit hard by the fall in the oil price.

After 15 years of solid growth boosted by rising oil and gas prices, the Norwegian economy has rapidly slumped.

Despite an expansionary budget, the government expects the economy to grow by just one percent this year, while the unemployment rate of 4.6 percent is hovering around the highest level in a decade.

According to Nordea Markets and DNB Markets, Thursday’s figures, while disappointing for the central bank, are not expected to have any significant influence on its decisions.

“The main message from the survey is that the drop in oil investment will slow next year pointing to a pickup in mainland growth,” Erik Johannes Bruce of Nordea Markets said.

Numerous economists expect the central bank to reduce its key rate again in September.

Meanwhile, Norway will take a first step this week towards using its $850 billion sovereign wealth fund, the world’s biggest, as a tool to combat the use of tax havens, two key members of parliament’s finance committee told Reuters on Wednesday.

The country’s right-wing minority government will be asked to take a two-pronged approach to regulation, examining both the fund’s own use of ownership structures designed to cut its liability for tax on its foreign investments as well as that of companies it invests in, the politicians said.

The move follows the Panama Papers leaks in April, which revealed details of corporate and individual tax evasion and triggered a global backlash against tax havens.

“We need to clarify the extent of the fund’s exposure to tax havens,” said finance committee chairman Hans Olav Syversen of the centrist opposition Christian Democrats, on which the government frequently relies for support.

“The most probable scenario is that parliament will tell the government to provide a set of tools to help ensure that tax havens, in the real sense of the word, don’t find the room for manoeuvre that they’ve had until now,” he added.