The Oil Fund does not make us as unique as we think. Someone has to take the crown ticket anyway. – E24

All western countries are running with broad crown measures on state budgets.

– The Norwegian debate may give the impression that we are better off than other countries because we have the Petroleum Fund. It makes us richer, but we have to pay for the crown measures like any other country, “says associate professor Torfinn Harding of the Norwegian School of Economics (NHH).

Preliminary figures from the Finance Ministry show that the Norwegian crown bill on the state budget will exceed NOK 200 billion this year. This is paid by taking the same amount of money from the Petroleum Fund. The fund is worth around NOK 10 billion.

Norway pays with less oil fund

In other countries, the state has to borrow money to pay for the measures.

– However, the increase in spending in the state budget must be paid for with less spending in the future. Borrowing countries must pay more in interest. Norway must pay by reducing the Petroleum Fund and the fact that the action rules for using oil money will give us less to use in the future, says Harding.

His conclusion is clear: the bill for all crown measures is being passed on to future generations, both in Norway and in other countries.

That the state of Norway is rich does not change this.

– The crown measures mean an increase in taxes or less public spending for future Norwegians. The measurements are not free, says Harding.

6 billion less to spend

Just over an additional NOK 200 billion in the state budget for crown measures this year means a correspondingly lower level of the fund in the future. By the act of using 3 percent of the fund annually, this means NOK 6 billion less oil money to spend in the future.

– Norwegians of the future will be poorer by using more oil money today, says Harding.

Along with NTNU economics professor Jørn Rattsø, he has written about this in the latest issue of the magazine. Samfunnsøkonomen.

All the others borrow the money

Countries without a well-stocked piggy bank must borrow money to finance the increase in the government’s budget deficit.

The consolation for them is that historically it is cheap for the state to borrow. The Norwegian state is very solvent and can borrow for 10 years at an interest of around 0.5 percent. Although the state in other countries may not be able to obtain such cheap loans, it is certainly much cheaper than before.

– Strong states can obtain loans at historically low interest rates. Norway is definitely one of these countries with a strong state, says credit analyst Pål Ringholm at brokerage house Sparebank1 Markets.

This is not necessarily the case worldwide.

– In about half of the world’s countries, the state is starting to have problems with it, Ringholm says.

You can borrow for a billion.

Borrowing NOK 200 billion will cost around NOK 1 billion in annual interest rates for the Norwegian state.

Therefore, it may seem very tempting to borrow NOK 200 billion for corona measures instead of borrowing from the Petroleum Fund and losing NOK 6 billion available, the expected return in the future.

But such loans have been largely prohibited under the Petroleum Fund Act. Parliament does not want a state that accumulates debt and an oil fund at the same time. With both the piggy bank inflated and the debt inflated, the net finances of the central government appear to be unclear.

Therefore, the crown measures are paid from the Petroleum Fund. On May 12, the 2020 Revised National Budget will likely come with new estimates of the state’s costs for the crown measures.