Norway acts to protect economy from coronavirus impact

Norway acts to protect economy from coronavirus impact
Prime Minister Erna Solberg and Finance Minister John Tore Sanner (centre right, far right) making the announcement on Thursday. Photo: Norwegian Government
Norway's government on Friday unveiled a 6.5bn Norwegian kroner financial package to help keep businesses afloat through the coronavirus pandemic.
The government announced it was suspending fees and taxes for the airline industry, and would pay all but the two first days of the salaries of employees temporarily laid off in a bid to improve companies' liquidity.  
 
Prime Minister Erna Solberg said at a press conference that it was “absolutely impossible to make an estimate” of how much the measures would cost the government. 
 
“It all depends on how long this lasts, and how strong the measures we need to have,” she said.  “We are put to a major test. The number of people infected is increasing rapidly, and it is affecting our everyday lives, our health care system and our economy.” 
 
The package followed a surprise rate cut on Thursday from Norges Bank, the country's central bank, which reduced its key interest rate to 1 percent from 1.5 percent. 
 
The Norwegian Institute of Public Health on Friday reported that there had been 131 new cases of infection int he 24 hours up to midnight on Thursday, bringing the national total to 750. 
 
The country is now ranked second in the world after South Korea in the number of infections per capita according to the Worldometers website, with 165 confirmed infections per million inhabitants. 
 
On Thursday Norway saw its first death from the virus, with an elderly patient dying at a hospital in Oslo. 
 
Finance Minister Jan Tore Sanner said it was fortunate the the Norwegian economy had been in such a good state at the time the virus hit. 
 
“The situation is now affecting many parts of the economy and many industries and companies. Fortunately, the Norwegian economy is fundamentally solid,” he told state broadcaster NRK. “We have a good starting point.”
 
In a press release accompanying the announcement, the government said it would also remove the three-day waiting period between the point at which companies stop paying employees' salaries and the time unemployment benefits begin, to help keep the income of those laid off stable. 
 
It said it would also change corporate tax regulations so that companies that are loss-making can re-allocate their losses towards the previous years’ taxed surplus. It will also change the tax regulations so that owners of loss-making companies can postpone payments of wealth tax. 
 
Sanner told NRK that the government was considering other changes to employment taxes to make it easier for companies.  
 
“Should the economic situation worsen, we will also consider measures to stimulate the economy more generally,” he said. 
 
Sanner would give few concrete details of the other exact measures the government would propose, but he said they would all fall into three categories. 
 
  • Immediate measures to avoid bankruptcies and dismissals.
  • Further concrete measures for industries and companies that are particularly hard hit and for the business community as a whole.
  • Broad measures to maintain activity in the economy if necessary.
 
The measures announced received a relatively lukewarm reception from the crisis-hit aviation and travel industries. 
 
“The measures presented today are still not sufficient given the very special emergency situation in the airline industry,” John Echoff, press officer for the airline SAS, wrote to NRK.
 
“Taken as a whole, this will turn out to be too little as this crisis continues developing,” said Kristin Krohn Devold, chief executive of the Norwegian Hospitality Association. “More needs to come in the days ahead.”
 
“We are very clear that this is not enough to avoid a bankruptcy wave across the entire travel and airline industries. But it is a signal that they are willing to listen.” 

Member comments

Become a Member to leave a comment.Or login here.