The Revised National Budget 2020

This page contains information in English about Norway's Revised National Budget for 2020, presented to the Storting as Report no. 2 (2019-2020) on 12 May 2020. The Revised National Budget presents the Government's programme for the implementation of economic policy and projections for the Norwegian economy.

Jan Tore Sanner, Minister of Finance

Information in English

Press Release

No.:

39/2020

Date:

12.05.2020

Contact:

Press telephone , Telephone +47 22 24 44 11

A budget to help us safely reclaim ordinary life

The Norwegian economy has suffered its most severe setback ever in peacetime. However, the Government is laying the groundwork for Norway’s emergence from the crisis.

‘The time ahead will be difficult. A great many Norwegians are without work, most of them because they were temporarily laid off. Many more are wondering if their job or their life’s work will still be there when the crisis ends. That is why we are proposing a number of measures to develop skills and encourage green restructuring for the future. We will create more jobs and integrate even more people into working life,’ said Prime Minister Erna Solberg.

The whole world is confronting a challenge that is without parallel in modern time. The Covid-19 outbreak is a serious threat to life and health. Extensive infection control measures at home and abroad are causing a sharp decline in Norwegian economic growth. Initiatives contained in the Revised National Budget will build on the powerful packages of measures already introduced to help people and companies through this demanding period.

‘Together, we will take back our everyday lives in a safe manner. With this budget proposal, we seek to strengthen activity all over the country and to promote green restructuring and business growth. We are also prioritising hospitals and services for vulnerable children. Young and old alike will feel secure and receive the help they need,’ said Minister of Finance Jan Tore Sanner (Conservative Party).

The Government’s proposed 2020 revised budget calls for the use of almost NOK 420 billion in petroleum revenues. That represents 4.2 per cent of the capital in the Government Pension Fund Global. The fiscal impulse is estimated at 5.1 per cent of mainland Norway’s trend GDP.

‘Increased spending has been a necessity in the current situation – both to avoid an even sharper downturn and to help healthy companies through the crisis so they can create jobs and growth when normal circumstances return,’ the Minister of Finance said.

Norway’s underlying financial condition is stronger than that of many other countries. Before the crisis, Norway had a high rate of employment, low unemployment, high productivity, robust banks and a well-functioning economy. The Norwegian business sector is flexible and enjoys a high degree of trust in society.

‘As we carefully begin opening up and relaxing infection control rules, we will have to adjust the existing measures and eventually introduce new ones to get the economy up to speed and people back to work. We must also keep in mind that the challenges we faced before the coronavirus crisis have not disappeared. Our solutions going forward must incorporate long-term perspectives,’ Mr Sanner said.

Further review of this year’s revised budget will be different from usual.

‘Back in March and April, the Storting handled four extensive crisis packages with major implications for the fiscal budget,’ Mr Sanner said. ‘The Government has also given notice, in coordination with the Storting, of a separate proposition in late May/early June with additional measures to lead us out of the coronavirus crisis.’

The Government plans to compensate municipalities and counties for extra costs and revenue shortfalls linked to the virus outbreak, thereby enabling local governments to maintain their activities.

Table 1 Key figures for the Norwegian economy. Percentage volume change from the previous year, unless otherwise stated.

 

Billion NOK1

     

 

2019

2019

2020

2021

Gross domestic product

3537.6

1.2

-2.0

 

Of which: Mainland Norway

3039.0

2.3

-4.0

4–7

Private consumption

1593.8

1.7

-8.5

 

Public consumption

866.2

1.7

3.2

 

Gross fixed investment

       

Of which: Public sector

211.3

6.9

2.7

 

Other key figures:

       

Employment

 

1.7

-1.0

 

Unemployment rate, LFS (level)

 

3.7

5.1

 

Unemployment rate, registered (level)2

 

2.2

5.9

 

Annual wage growth

 

3.5

1.5

 

Consumer price index (CPI)

 

2.2

1.0

 

Crude oil price, NOK per barrel (current prices)

 

564

331

 

Crude oil price, USD per barrel (current prices)

 

64.1

33.2

 

Household savings rate (level)3

 

7.6

15.6

 

GDP growth among trading partners4

 

1.9

-6.0

 

Three-month money market rate, per cent5

 

1.6

0.9

 

Import-weighted NOK exchange rate (yearly change, per cent)6

 

2.9

10.1

 

1 Preliminary national accounts figures, current prices.

2 Measured as percentage of the labour force in the Labour Force Survey (LFS).

3 Includes saving in voluntary organisations.

4 Norway’s 25 most important trading partners weighted by respective shares of Norwegian exports from mainland Norway.

5 Calculation method based on forward prices in March.

6 Positive figure indicates NOK depreciation.

Sources: Statistics Norway, OECD, national sources, Norges Bank, Norwegian Labour and Welfare Administration, Reuters and the Ministry of Finance.

Table 2 Key figures for the Fiscal Budget and Government Pension Fund. Billion NOK

 

2018

2019

2020

Total revenues

1350.6

1407.4

1235.0

1 Revenues from petroleum activities

273.5

283.2

125.8

1.1 Taxes and fees

117.3

140.4

39.8

1.2 Other petroleum revenues

156.2

142.9

86.0

2 Revenues excl. petroleum activities

1077.1

1124.2

1109.2

2.1 Taxes and fees from mainland Norway

986.4

1030.9

1011.7

2.2 Other revenues

90.6

93.3

97.5

Total expenditures

1318.1

1378.1

1616.8

1 Expenditures on petroleum activities

22.6

26.3

28.0

2 Expenditures excl. petroleum activities

1295.6

1351.8

1588.8

Fiscal budget surplus before transfers to/from
Government Pension Fund Global

32.4

29.3

-381.8

- Net cash flow from petroleum activities

251.0

256.9

97.8

= Non-oil budget surplus

-218.5

-227.6

-479.6

+ Transfers from Government Pension Fund Global

225.5

228.6

479.6

= Fiscal budget surplus

7.0

0.9

0.0

+ Net transfer to Government Pension Fund Global

25.4

28.4

-381.8

+ Interest, dividends etc. on Government Pension Fund1

225.0

247.5

258.0

= Fiscal budget and Government Pension Fund consolidated surplus1

257.4

276.7

-123.8

Memo:

     

Market value of Government Pension Fund Global2

8 484

8 243

10 086

Market value of Government Pension Fund2

8 724

8 483

10 355

National Insurance Scheme retirement pension obligations 2,3

8 407

8 722

9 088

Structural non-oil budget deficit, billion NOK

225.1

245.2

419.6

Per cent of capital in Government Pension Fund Global

2.7

3.0

4.2

Per cent of trend GDP for mainland Norway

7.6

8.0

13.1

Fiscal impulse, percentage points4

-0.4

0.4

5.1

Real, underlying expenditure growth, per cent

0.7

1.7

12.1

1 Not including exchange rate gains or losses.

2 At start of year.

3 Present value of future retirement pension rights already earned in the National Insurance Scheme.

4 A positive figure indicates an expansive budget effect. This indicator does not take into account the fact that different income and expenditure items may affect economic activity in different ways.

Sources: Ministry of Finance and Statistics Norway.