“The Norwegian economy is doing well. Businesses are investing more and employment is rising throughout the country. We are using the good times to secure a sustainable welfare state and a safer Norway”, says Minister of Finance Siv Jensen.
The restructuring of the economy must continue in order for us to reach the climate goals and further diversify the economy to promote growth.
“To support the economy’s growth potential, we maintain fiscal responsibility. The fiscal budget is well adapted to the economic situation and will make Norway stronger and more secure”, says the Minister of Finance.
Given favourable economic conditions, a tighter fiscal stance now allows the majority of new jobs to be created within the private sector. The 2019 fiscal budget has a neutral impact on the Norwegian economy. Spending of oil revenue amounts to 2.7 per cent of the Government Pension Fund Global. This is well in line with the fiscal rule, which says that transfers from the GPFG to the central government budget shall, over time, follow the expected real return on the fund, estimated at 3 per cent.
The government maintains its growth-supporting policies by cutting taxes and duties also in the 2019 budget. Prioritized areas continue to be knowledge, transport and communication, health, and an efficient provision of services at the local level.
“By cutting taxes and duties, we provide businesses and families with more economic leeway. In addition, lower taxes encourage job creation and make work more attractive. We are constructing roads and railways at a rapid pace, and we continue to promote research, innovation and build competence. We make the everyday life easier, and, at the same time, improve competiveness and promote a shift towards greener, smarter and more innovative business activities”, says the Minister of Finance.
The political platform for this government signalled measures to get people back into the workforce and to encourage integration into the Norwegian society. In the Fiscal Budget, spending on inclusion and integration is increased.
“Companies are now hiring, and we should use the good times to include more people in the work force. At the same time, we must provide targeted support to families who struggle financially. The government will increase housing support and provide a larger number of low-income families with free part-time access to day care”, says the Minister of Finance.
The government is also implementing measures to make Norway more secure.
Long-term plans for Norwegian armed forces are supported by large investments and higher ambitions for the army and the home guard. More resources are also allocated to strengthen the Norwegian police security service and the police force.
A more secure Norway is also about efficient provision of social welfare. That is why we invest in hospitals, more effective treatment, and in the quality of elderly care.
Our security is also shaped by circumstances outside the Norwegian border.
“We propose an elevated level of targeted foreign aid, including to the fight against marine litter. In this way, Norway contributes to development and stability globally, and provides support for common solutions to global challenges”, says the Minister of Finance.
Main features of the Government’s fiscal policy in 2019:
- Petroleum revenues spending, as measured by the structural non-oil deficit, is estimated at NOK 231.2 billion, equivalent to 7.5 per cent of GDP for mainland Norway. The fiscal impulse, as measured by the change in the structural non-oil deficit in per cent of mainland GDP, is 0.0 percentage points.
- The non-oil deficit is projected at NOK 232.5 billion. This deficit is fully financed through a transfer from the Government Pension Fund Global.
- Net cash flow to the Fund from petroleum activities is estimated at NOK 285.8 billion.
- Petroleum revenues spending in 2019 corresponds to 2.7 per cent of the estimated capital in the Government Pension Fund Global at the beginning of 2019. This is below the expected real return of the Fund, estimated at 3 per cent.
- The real, underlying growth in fiscal budget expenditure from 2018 to 2019 is estimated at 1.3 per cent, well below projected real GDP growth in the mainland economy. In nominal terms, expenditure is projected to grow by 4.0 per cent.
- The consolidated surplus of the Fiscal Budget and the Government Pension Fund, including NOK 225.7 billion in interest and dividends, is estimated at NOK 279.0 billion.
- The general government financial balance is estimated at NOK 277.3 billion, equivalent to 7.6 percent of GDP.
- The market value of the Government Pension Fund Global is estimated at NOK 8 700 billion at the end of 2018, and NOK 9 195 billion at the end of 2019.
Read more: The Norwegian Fiscal Policy Framework
Source: Government / Norway Today