IMF: Norway need to become less dependent on oil

OSLO.Finance minister Siv Jensen and delegation head the IMF, Thomas Dorsey.OSLO.Finance minister Siv Jensen and delegation head the IMF, Thomas Dorsey. Photo: Berit Roald / NTB scanpixPhoto: Berit Roald / NTB scanpix

The International Monetary Fund believes government policies are well adapted to the situation in Norway. At the same time the IMF thinks that Norway needs to prepare for a less oil-dependent economy in the future.

IMF annual assessment of the Norwegian economy and economic policy was submitted to Finance Minister Siv Jensen on Thursday morning.
IMF envisages in brief outline a growth in GDP for mainland Norway of about 1 percent this year, and that growth will pick up next year. Unemployment is expected to increase during the current year, but decreasing next year. The estimates are in line with the government’s evaluations in the revised national budget, which was submitted last Wednesday.

Double challenge
IMF also point out that the Norwegian authorities face a double challenge: The government must both curb the economic downturn in the short term and facilitate the transition to a less oil-dependent economy of the future. Short-term fiscal policy measures must not impede this necessary adjustment, it emphasises.
– I agree with the IMF that it is important to facilitate a smooth transition to a new and less oil-dependent growth model. We must remain committed to facilitating growth in competitive parts of the private sector, says Jensen.
IMF believes that the macroeconomic framework has managed to mitigate the effects on the mainland economy of the sharp fall in oil and gas prices and the reduced demand from oil-related activities.

Jensen satisfied
It pointed out that shielding of public budgets, lower interest rates and a weaker exchange rate has dampened demand fall and contributed to improving the cost competitiveness. These are evaluations Jensen highly appreciate to  hear.
– I am glad that the IMF believes the framework for economic policy has passed the test and proved effective. I also note  that the delegation supports the government’s economic program that we recently presented it in the revised national budget.
IMF also stipulates that the state of the Norwegian banking sector is good, but is worried about debt in Norwegian households and the sharp rise in house prices.


Source: NTB scanpix / Norway Today