Norway Targets Lower Oil-Wealth Spending in Budget, Sanner Says

(Bloomberg) -- Norway’s Covid-related economic-support measures need to be phased out gradually and the government’s use of oil money should be tightened in the 2021 budget, the country’s finance minister said.

In an interview with E24.no, Jan Tore Sanner said he has a clear goal of reducing the use of oil revenue, and believes it should happen as early as next year, in the budget to be presented in October.

“It will be a goal to reduce the use of oil money somewhat by next year, but how much, it’s too early to say, also because the uncertainty is so great,” he said. “We must take into account that we must implement new measures throughout the autumn, and we are ready for that if necessary.”

Norway’s budgetary rules state that over time a maximum of 3% of the country’s oil fund’s value should be allocated yearly to the budget. In the government’s latest estimate from the end of May, this year’s use of oil money is estimated at 425 billion Kronor ($47 billion). That corresponds to 4.2% of the oil fund’s value. According to Sanner, Norway will gradually return to the 3% level.

“There will be a need for measures in the future to get value creation up and people back to work,” he said. “Those measures must also contribute to solving long-term challenges that we worked on even before the pandemic.”

Sanner also said he has not yet adjusted his May forecast for a contraction in GDP of 4% this year.

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