The coronavirus causes a large cut in the development aid budget

This year’s development assistance budget will be cut by several hundred million, perhaps up to one billion crowns. This is not due to the demands of Frp, but to the coronavirus.

– The development assistance budget should be reduced and aid to neighboring war and conflict zones should be strengthened.

This is one of the top five demands that FRP has for this year’s state budget. The budget will be presented in just over two weeks.

FRP’s demands were overcome when Siv Jensen convened his own national board last weekend. When Aftenposten asked Jensen about how big cuts in refugees and help are needed for the government to get FRP support, she answered the following:

– As much as possible. But we negotiate in closed rooms and not in the media.

Probably a part of several hundred million crowns

Regardless of this requirement, the government will present a budget with significant cuts in the development assistance budget. Aftenposten is informed of this from various sources.

The magnitude of the cuts depends on predictions for the Norwegian and international economy. They are unsafe. They are affected, among other things, by the time a coronary vaccine is expected to arrive.

A source close to the government’s work with the development aid budget reveals that various sums have been paid. Cuts of around a billion and less have been discussed. What the government has finally landed on depends on how optimistic the forecasts are based on next year’s economic growth.

– Of course, the state budget must adapt to the economic situation, says Mudassar Kapur (H). He chairs the Finance Committee of the Storting.

However, Kapur will not reveal anything about the figures or the government’s budget priorities.

– We will have to wait and see what comes in a few weeks, he says.

Everything indicates that there will be cuts in the class of hundreds of millions.

The budget is linked to gross national income

The reason is that the size of the development assistance budget is affected by the value of everything we produce in Norway for a year. And Norwegian trade and industry are affected by the economies of other countries with which we trade.

Specifically, the government has stated that it will “allocate one percent of estimated gross national income” to development aid each year.

This was the goal of the government when the Liberal Party joined the government in 2018. It was repeated by the FRP, the Conservative Party, the Christian Democrats and the Liberal Party the following year when the Christian Democrats entered the government.

Meet the goal this year

When the government presented this year’s state budget last fall, the size of the development assistance budget was determined based on an estimate from this year’s GNI.

“The development assistance framework for 2020 is NOK 1.4 billion / 3.6% more than the balanced budget in 2019 and corresponds to 1% of the GNI estimate for 2020,” the Ministry of Foreign Affairs wrote in the budget of 2020.

The result was that the government set aside just over NOK 39 billion for development assistance this year.

No one could then predict the coronavirus and the enormous consequences it would have for the economy.

Last year’s estimates turned out to be too high. Therefore, this year Norway will exceed the 1% target. The government did not cut the development assistance budget when it presented a revised budget in May.

Although KrF would also have liked to have reached the goal next year, there is little indication that the Conservatives want it.

– The percentage target is important to KrF and an important part of the government platform.

That’s all that KrF’s tax policy spokesperson Tore Storehaug wants to say about the case now.

Forecast of decline this year

Statistics Norway (SSB) recently presented new forecasts on how the economy may develop in the future. The uncertainty is great. But Statistics Norway’s forecasts give an idea of ​​how things will go with the development assistance budget, as there is a link here.

– It is not until the end of 2021 that activity is expected to return to the same level as before the virus outbreak, writes Statistics Norway.

The estimate is based on the fact that the infection remains mostly low until then. If the infection increases so much that new comprehensive measures must be implemented, things may go differently.

– In that case, the recession could be deeper and more lasting than we now imagine, the agency writes.