Corona bill so far: SEK 241 billion – E24

The revised 2020 national budget shows that the bill for the crown measures has reached almost NOK 241 billion in the state budget.

This means that the use of oil money has doubled exactly since the 2020 budget was introduced last fall, measured by the real money spent on the state budget.

At the press conference on Tuesday afternoon, Finance Minister Jan Tore Sanner (H) said the increase in the use of oil money “is without parallel in history.”

– But even if it is expensive, it is necessary. The measures will facilitate the way out of the crisis, he said.

The increase in spending is distributed as follows:

• Measures for companies: NOK 109.5 billion. The compensation scheme for companies with large sales failures is the largest element with NOK 50 billion.
• Measures for people: NOK50.9 billion. The increase in unemployment benefits represents slightly less than half of this.
• In addition, other measures and reduced tax revenue are due to poorer times in addition to the measures taken and proposed: 50.3 billion.
• Sum: NOK 240.8 billion extra. This is taken from the Petroleum Fund so that the actual total use of petroleum money in the state budget is NOK 479.6 billion.

This means that spending in the state budget will increase by 17 percent from last year to this year.

Much would come anyway

The crown bill of just under NOK 241 billion can be broken down into new financial measures taken and changes that happen automatically, without new decisions:

• New financial measures taken after the crisis: NOK 157.4 billion.
• The additional bill that would come even if a single new measure were not adopted: NOK 83.4 billion. These are the so-called “automatic stabilizers”. An example is the reduction of tax revenues with current regulations because companies and individuals are reduced in their income.

The account increased by a fifth

This means that the bill has increased by NOK 40 billion since the beginning of April.

Later, the government estimated that the crown measures would cost an additional NOK 201 billion in the state budget.

Additional bill increases call the corrected oil deficit as much. This is covered by taking more money from the Oil Fund and showing how much extra oil money is actually spent.

Typically, the use of oil money is measured by it corrected structural oil deficit in the state budget. This is a calculated size that eliminates the effect of good and bad times on government revenue and expenditure. It shows the underlying use of oil money over time, and the action rule is linked to this deficit.

Uses of the fund as in the financial crisis.

The use of oil money in 2020 is now estimated at 4.2 percent of the fund. It is on par with its use during the financial crisis of 2008–2009, but considerably lower than in the childhood action rule after 2001.

In 2002–2003, there was a recession in the economy, so the state spent more money to keep the wheels running. But then the Petroleum Fund was much smaller than now.

Historical deficit

Current low oil revenues for the state and heavy use of oil money this year will result in a deficit of NOK 124 billion in the state budget and the Oil Fund as a whole.

This is the first time since the early 1990s that this has been happening.

– Still, it is correct and necessary to work hard now. If unemployment bit and business struggled for many years, it would weaken the tax base for a long time, Sanner says at the press conference.

Measures outside the state budget.

The government has implemented a series of financial measures that do not have a direct effect on the income and expenses of the state budget.

Tax payments in 2020 are exposed to companies and individuals. This improves liquidity and means that companies and individuals will have NOK 133 billion more to spend in the coming months and weeks.

But this is just a delay in payment, there is no relief.

In addition, guarantee and loan schemes have been introduced for the business sector with a total framework of around NOK 130 billion. These are not expenses in the state budget, but capital flows in the state.

However, some of the loans and guarantees are recognized as expenses of the state budget in the form of provisions for credit losses. This is equivalent to at least NOK 16 billion, which is included both in the expenditure figures and in the framework of the loan and guarantee schemes.

In short, this means that the government measures have a total framework of almost NOK 500 billion.

Thus, the framework represents almost a sixth of the total production (GDP) of mainland Norway last year, which exceeded NOK 3 billion.