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The most serious shock to the Norwegian economy in the post-war period, says Finance Minister Jan Tore Sanner. He says Norway has never been in such a situation before.
Shortly after taking up the post of Finance Minister, Jan Tore Sanner (H) had to deal with what he describes as the most serious shock to the Norwegian economy in the post-war period.
Håkon Mosvold Larsen / NTB Scank
published:
– My most important message is that it may be steep in the future, but that we will get back to everyday life safely, Sanner (H) tells NTB.
On Tuesday, he presents a revised national budget. The backdrop is Norges Bank zero interest, 260,000 layoffs, a free-falling gross national product (GDP), and crisis measures worth several hundred billion crowns.
Sanner now understands the outlines of the economic consequences of the virus outbreak and shutdown.
– We cannot say that we have the worst behind us, he points out.
– The challenge for us is due in part to the fact that measures to prevent infection will continue to have consequences for the economy. We are also hit by low oil prices and the sharp decline in the international economy. There will be less activity and tourists will take time to return to Norway.
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Three phases
The government has already spent NOK 140 billion on financial measures and 100 billion on loan guarantees.
Furthermore, the 2020 budget weakens by $ 60 billion in lost tax revenue and increases spending on national insurance.
– We have used enormous financial resources. But the alternative had cost us even more society, says Sanner.
– The alternative to spending a large amount of oil money in the economy has now been more bankruptcies, higher unemployment, and a way back.
The government has divided crisis management into three phases. While Phase 1 was about immediate income support, Phase 2 was about ensuring healthy and viable businesses stay afloat and prevent the drop from being too big.
“Now we cannot say that we have the worst behind us,” Finance Minister Jan Tore Sanner (H) said in an interview with NTB ahead of the presentation of the revised national budget on Tuesday.
Håkon Mosvold Larsen / NTB Scank
– Lost match
Phase 3 is about strengthening the crisis by focusing on experience, green restructuring, and activity. Sanner will facilitate the workplace and a strong and strong business community after the crisis.
In Phase 3, new billions may appear. The use of money is missing, says the Minister of Finance, who also has a warning:
– We must spend the money properly, making sure that the measures are specific, temporary and reversible. We must ensure that companies do not permanently depend on crisis relief and avoid weakening the line of work.
The Minister of Finance emphasizes that the use of money will decrease again and recalls that the rule of not spending more than 3 percent of the oil fund on the state budget should apply in the future.
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Crisis at home and abroad.
The Norwegian economy is affected in three ways. The shutdown has led to a halt in domestic demand. The Ministry of Finance estimates a drop in GDP of around 4 percent this year, but emphasizes that the uncertainty is great and that the drop may be greater.
At the same time, harsh measures by Norway’s trading partners have led to a sudden halt in exports.
– The recession in the international economy will have consequences for Norwegian jobs and can affect the Norwegian economy for a long time, says Sanner.
A third aspect is the crisis in the oil industry.
– The fall in oil prices and the uncertainty surrounding the demand for oil and gas in the future create great challenges for oil companies and the supply industry, says the Minister of Finance.
On Tuesday, the details come in a separate crisis package for the sector. The essence of the proposal is for companies to receive deferred taxes, which the government expects to provide up to NOK 100 billion in increased liquidity.
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– good condition
Despite the bleak outlook, Sanner wants to end with an optimistic message:
– Norway has solid government finances, robust banks, a highly educated population, fantastic natural resources and close cooperation between the social partners and the parties to the Storting, he says.
– We have the best conditions to get out of the crisis well. But now we should not lower our shoulders and think that it is over.
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