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A global pandemic will help the government spend 419.6 billion crowns this year, compared to an estimate of 244 billion crowns this fall.
Finance Minister Jan Tore Sanner (H) at a press conference on the business compensation plan in April, along with Finance Norway CEO Idar Kreutzer (tv) and tax director Hans Christian Holte (th) .
Terje Pedersen
published:,
The case is being updated.
Estimate the government in a 2020 budget update.
In May of each year, the government releases an update to this year’s budget, which is often called a “revised budget.”
The use of oil money was expected in advance to be drastically revised, after the crown crisis has increased public spending and led to extensive and costly crisis measures by the government.
In the fall, the government estimated the use of oil money for this year at NOK 244 billion, which corresponds to 2.6 percent of the value of the Petroleum Fund.
At the same time, the government says it believes the corona crisis will cause a four percent decline in the continental economy this year, while in the fall it expected a 2.5 percent increase.
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Use more than the action rule
The use of oil money this year corresponds to 4.2 percent of the value of the Oil Fund, and therefore much more money is spent than is normally used.
The action rule requires the government to spend no more than three percent of the fund’s value on its annual budgets. This limit exceeds NOK 303 billion this year, depending on the value of the fund in New Years.
But the rule is flexible and it is intended that the state can spend more in times of crisis. On the other hand, the use of money from the Petroleum Fund is expected to be reduced during periods of better economic growth.
The use of oil money is measured by structural budget deficits corrected for oil. This figure has been adjusted to give a better idea of the underlying development in the use of oil revenues over the state budget.
In reality, the use of money may therefore be greater or less than the number set by the government.
For example, tax revenues may be temporarily low during a period of weak economic development, and the government will correct the use of oil money for such temporary effects.
coronavirus
Government gives full throttle
The government also calculates how much the use of oil money increases as part of the economy, to show whether the government is contributing to gas in the economy or to slow economic growth.
This is known as the “budget boost,” which is now estimated at 5.1 percent, while a slightly negative boost of minus 0.2 percent was expected this year. This means that public spending has a strong stimulating effect on the economy.
“To mitigate the effects of the virus outbreak on the Norwegian economy, very broad economic measures have been implemented on several occasions,” the government writes in a statement.
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Up to 500 billion expected
Joachim Bernhardsen of Nordea Markets expected ahead of time that the government’s estimate of the use of oil money on Tuesday could be between NOK 450 and 500 billion.
The government has previously said that the crisis measures bill will increase by NOK 57 billion for each additional month of greatly reduced activity.
“How high the end use of oil money will be depends on how long this crisis lasts,” Bernhardsen said before today’s budget was presented.
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It costs 200 billion crowns
In April, the government estimated that the crisis measures would cost around NOK 139 billion. In addition, it would cost the state around NOK 60 billion to decrease tax revenue and increase spending for laid-off, unemployed, and sick people.
These are some of the government’s emergency measures:
- business loan guarantees with a limit of NOK 50 billion
- offer of loans in the bond market through the Government Bond Fund, with a limit of NOK 50 billion
- compensation scheme for companies losing revenue due to the crown crisis, at a cost of NOK 10-20 billion per month
In addition, the government has proposed temporary changes to the oil tax that will reduce the state’s revenue by NOK 100 billion overall for 2020 and 2021.
You have notified several measures
The crisis is over. Instead, it is entering a new phase where companies are likely to need help to get the wheels working again. It can take a long time for the world economy to return to almost normal business.
The government has announced that more measures will be taken when measures to combat infection are reduced, to boost the economy.
In late May-June, the government is proposing a separate proposal to exit the crisis.
