Norway Proposes Capping Oil Fund Withdrawals at 3% with New Inflation Adjustment

The Norwegian government is set to propose a new ceiling on annual withdrawals from its sovereign wealth fund, the Government Pension Fund Global. The Ministry of Finance plans to present the proposal on Friday, with an announcement expected during a parliamentary session on May 2. Currently, the fiscal rule allows the government to withdraw up to 3% of the fund's value each year to spend in the state budget. Under the new proposal, that 3% cap would remain in place, but a key change would introduce a mechanism to adjust withdrawals for inflation, providing more stability over time. The fund's value was approximately 19.3 trillion Norwegian kroner at the end of March 2026. This means the 3% withdrawal cap would allow for annual spending, though the exact amounts will fluctuate with the fund's size and inflation rates. Opposition parties have criticized the plan as insufficient, arguing it doesn't go far enough to ensure long-term fiscal discipline. A leaked draft of the white paper had suggested potentially lowering the cap to 2.5%, but the final proposal maintains the 3% threshold while adding the inflation adjustment. The announcement marks a key moment for Norway's fiscal policy, as the government balances spending needs with preserving the fund for future generations. The white paper is expected to outline the reasoning behind the changes and how they align with broader economic goals.