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Government of Norway

10/07/2019 | Press release | Distributed by Public on 10/07/2019 02:02

National Budget 2020: A budget to promote employment and welfare

The Norwegian economy is in its third year of economic expansion. Employment growth is strong and the registered unemployment rate has fallen to levels last seen in 2008. Non-oil business investments are at a 10-year high. These positive developments are expected to continue. Non-oil GDP is projected to increase by 2.7 per cent this year and 2.5 per cent next year.

'Unemployment has declined across the country, and employment growth is strong. I am pleased to see strong employment growth and that about 80 percent of the increase in employment has come in the private sector. This improves the sustainability of our welfare system,' says Finance Minister Siv Jensen.

With economic growth picking up and unemployment declining, the Government has moved to a neutral fiscal policy stance in recent years. The Government is continuing this responsible policy in the 2020 budget, supporting competitiveness, structural adjustment and private sector growth. The fiscal impulse for 2020 is estimated at -0.2 percentage points.

Given robust economic growth, the government has in recent years restrained the growth in public spending. 'The fiscal policy stance has facilitated economic growth and encouraged job creation in the private sector,' says Finance Minister Siv Jensen.

The 2020 fiscal budget is well adapted to the economic situation. Spending of oil revenue amounts to 2.6 per cent of the Government Pension Fund Global. This is well in line with the fiscal rule, which states that when the economy is performing well spending should be kept below the long-term expected real return on the fund, estimated at 3 per cent.

In the budget for 2020 the Government continues its focus on transport infrastructure, research, technology and education. These policies will help reduce carbon emissions and foster growth in green industries.

The main features of the Government's fiscal policy in 2020 are:

  • Petroleum revenue spending, as measured by the structural non-oil deficit, is estimated at NOK 243.6 billion, equivalent to 7.6 per cent of mainland GDP. The fiscal impulse, as measured by the change in the structural non-oil deficit as a share of mainland GDP, is estimated at -0.2 percentage points.
  • The non-oil deficit is projected to reach NOK 241.1 billion. This deficit is fully financed by transfers from the Government Pension Fund Global.
  • The net cash flow to the Fund from petroleum activities is estimated at NOK 245 billion.
  • Spending of petroleum revenues in 2020 corresponds to 2.6 per cent of the estimated capital in the Government Pension Fund Global at the beginning of 2020. This is below the expected real return of the Fund, estimated at 3 per cent.
  • The real underlying growth in budget expenditure from 2019 to 2020 is estimated at 0.8 per cent, below projected real GDP growth in the mainland economy. In nominal terms, expenditure is projected to grow by 3.9 per cent.
  • The consolidated surplus of the Fiscal Budget and the Government Pension Fund, including NOK 251.3 billion in interest and dividends, is estimated at NOK 255.2 billion.
  • The general government financial balance is estimated at NOK 249.4 billion, equivalent to 6.6 per cent of GDP.
  • The market value of the Government Pension Fund Global is estimated at NOK 9,500 billion at the start of 2020.

Read more: The Norwegian Fiscal Policy Framework


Key figures for the Norwegian economy. Percentage volume change from previous year

Billion NOK1

2018

2018

2019

2020

2021

Private consumption

1533.6

1.9

1.8

2.7

2.9

Public consumption

826.8

1.4

1.6

1.7

Gross fixed investment

851.5

2.8

6.1

1.2

-0.5

Of which: Petroleum extraction and pipeline transp.

153.4

1.9

17.8

-3.5

-10.4

Business sector Mainland Norway

311.0

6.8

6.2

3.4

2.7

Housing

193.5

-6.2

1.4

2.2

0.8

Public sector

192.7

7.5

1.3

0.3

Demand from Mainland Norway2

3057.6

2.0

2.1

2.2

2.2

Exports

1357.3

-0.2

2.3

7.3

3.5

Of which: Crude oil and natural gas

569.4

-4.8

-2.9

14.0

4.6

Goods except oil and gas

411.0

2.0

5.6

5.0

5.1

Services except oil, gas and shipping

247.2

4.4

5.3

5.0

1.6

Imports

1152.2

1.9

5.4

1.8

1.3

Gross domestic product

3530.9

1.3

1.8

3.8

2.3

Of which: Mainland Norway

2906.9

2.2

2.7

2.5

2.0

Other key figures:

Employment. 1000 persons

1.6

1.6

1.0

0.6

Unemployment rate. LFS (level)

3.8

3.5

3.4

3.4

Unemployment rate. registered (level)

2.5

2.2

2.1

2.1

Annual wage

2.8

3.2

3.6

Consumer price index (CPI)

2.7

2.3

1.9

1.8

Underlying inflation (CPI-ATE)

1.6

2.4

2.2

2.0

Crude oil price. NOK per barrel (level)

582

538

476

474

Three-month money market rates. pct.3

1.1

1.6

1.7

1.5

Import-weighted exchange rate (yearly change)4

0.1

2.0

0.5

0.0

1 Preliminary national accounts in current prices.

2 Excluding inventory changes.

3 Technically calculated using forward prices in September.

4 Positive number indicates a depreciation of the krone.

Sources: Statistics Norway, ICE, Norges Bank, Norwegian Labour and Welfare Administration, Reuters, Macrobond and Ministry of Finance.


Key figures for the Fiscal Budget and Government Pension Fund. NOK billion

2018

2019

2020

1. Fiscal Budget

Total revenues

1 350.6

1 387.2

1 446.4

Revenues from petroleum activities

273.5

266.3

273.0

Revenues excl. petroleum activities

1 077.1

1120.9

1173.5

Total expenditures

1 318.1

1381.6

1442.6

Expenditures on petroleum activities

22.6

28.0

28.0

Expenditures excl. petroleum activities

1295.6

1 353.6

1 414.6

Fiscal budget surplus before transfers from the Pension Fund Global

32.4

5.6

3.9

Net revenues from petroleum activities

251.0

238.3

245.0

= Non-oil budget surplus

-218.5

-232.7

-241.1

+ Transfers from the Pension Fund Global

225.5

232.7

241.1

= Fiscal Budget surplus

7.0

0.0

0.0

2. Government Pension Fund

Net transfer to the Pension Fund Global

25.4

5.6

3.9

+ Interest and dividends on the Pension Fund1

225.0

236.7

251.3

3. Fiscal Budget and Government Pension Fund
consolidated surplus
1

257.4

242.3

255.2

1 Excluding capital gains or losses.

Sources: Ministry of Finance and Statistics Norway.


General government financial balance.1 NOK million

2018

2019

2020

Central government financial balance

308 447

266 990

276 528

Fiscal Budget surplus and Surplus in Government Pension Fund

257 445

242 257

255 167

Non-oil budget surplus

-218 513

-232 714

-241 084

Net revenues from petroleum activities

250 959

238 271

244 951

Interest and dividends on the Pension Fund

224 999

236 700

251 300

Surplus in other central government and social security accounts

-1 936

167

124

Definitional differences between Fiscal Budget and national accounts2

52 938

24 565

21 238

+ Local government financial balance

-19 771

-22 012

-27 093

= General government financial balance

288 676

244 977

249 435

In per cent of GDP

8.2

6.8

6.6

1 Statistics Norway published new data for public finances on 20 September 2019, after the projections on public finances were finalised. The revisions in the latest publication are not included in the National Budget for 2020.

2 Includes central government accrued but not recorded taxes. Direct investments in state enterprises, including government petroleum activities, is defined as financial investments in the national accounts.

Sources: Statistics Norway and Ministry of Finance.

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