Category: Financial / Investment
The Labor government, which resigned yesterday, presented what it called a “cautious” budget, saying it would use 135 billion kroner ($22 billion) of Norway’s oil wealth to plug deficits next year, equal to 5.5 percent of mainland gross domestic product. That leaves Solberg’s administration with 54 billion kroner to spend before it breaches the nation’s fiscal policy rule.
“It actually leaves some room for extra spending, especially given the recent weakness in the Norwegian economy,” saidBernt Christian Brun, a chief strategist at Danske Bank A/S in Oslo. “You could even argue that a counter cyclical budget would be somewhat more expansionary.”
Solberg and her coalition partner, the Progress Party, have until early November to adjust the spending plan put forward by the outgoing administration. While she has promised to stick to the fiscal rule, which caps expenditure of Norway’s oil income at 4 percent of its wealth fund, the two parties have signaled they want to spend more on infrastructure, education and health care. Those measures will come on top of planned tax cuts.
Published: July 5, 2022