Norway dips deeper into oil riches

Norway plans to spend a record amount of its oil riches next year -- an election year -- to stimulate its economy hit hard by oil price weakness, a budget bill presented on Thursday showed.

Norway dips deeper into oil riches
Finance Minister Siv Jensen presented the government's budget proposal on Thursday. Photo: Heiko Junge/NTB Scanpix
The right-wing government plans to use 225.6 billion kroner (€25 billion, $28 billion at current exchange rates) of its oil revenues in 2017, or 20 billion kroner more than this year.
That corresponds to an extra 0.4 points of gross domestic product (GDP), the government said in the budget bill.
Norway's oil-dependent economy has slowed considerably as a result of the falling oil price, which has dropped from around $115 per barrel in mid-2014 to around $50 now.
But the economy is showing signs of recovery.
Thanks to interest rate cuts, a weaker Norwegian krone, and an expansionary budget policy, growth is picking up and the unemployment rate appears to be topping out at the enviable level of around 5.0 percent.
Mainland GDP — excluding oil, gas and shipping — is expected to tick in at 1.0 percent this year, 1.7 percent next year, and 2.4 percent in 2018, according to the government's forecasts.
“But it's too early to say that the Norwegian economy is cured,” Finance Minister Siv Jensen said as she presented the 2017 budget bill.
The government therefore plans to spend up to 3.0 percent of its sovereign wealth fund, the world's largest, today worth around 7.13 trillion kroner (€793 billion, $886 billion). That's more than the 2.8 percent used this year, but less than the 4.0 percent maximum that is authorised.
The country's September 2017 legislative elections look set to be a close race between the ruling coalition — made up of the Conservatives and the anti-immigration populist right — and the leftwing opposition.
The budget bill calls for tax breaks for households, a one-point reduction of the corporate tax rate to 24 percent, a tax hike on petrol, and sets a seven-percent target for biofuels' market share.
The minority government will now undertake negotiations with its centre-right allies in parliament to win their backing for the budget, which means it could see some amendments before being passed.

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‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.