Major oil producing countries selling stocks to pay bills
Major oil producing countries are selling stocks to pay their bills.
Sovereign wealth funds of oil-rich countries like Norway, Saudi Arabia, Russia and Qatar sold more than $213 billion worth of stocks in 2015, a report by Sovereign Wealth Fund Institute said.
With oil prices staying low, the global sell-off is likely to continue in 2016. Wealth funds could withdraw more than $404 billion from global stock markets if oil prices remain between $30 and $40 per barrel this year, the SWFI said.
Crude prices collapsed more than 70% in the last 18 months. The plunge means many oil countries are facing growing holes in their budgets. Rather than raising taxes or cutting spending, many have resorted to tapping their rainy day funds.
“Russia has steadily been depleting its sovereign wealth fund to finance large-scale projects, fund parts of government and attract foreign direct investment,” the SWFI report said.
Norway’s Central Bank said the country might extract $9.3 billion from the wealth fund in 2016 in order to deal with the low oil prices.
