Daily Management Review

Norway to increase spending of sovereign wealth fund by 10% in 2017


10/11/2016


For the first time in 25 years, Norway can get a shortfall budget. The authorities decided to withdraw money from the wealth fund. Their plans also include reduction the tax burden for individuals and large corporations. Despite this, the economic growth is expected to drop to 0.4% in 2017 year.



Norway continues to extract money from the wealth fund, volume of which amounts to $ 890 billion. The money is used to support economic stabilization in anticipation of further fall of the oil sector.

According to budget of Norway in 2017, next year the government plans to increase support of the oil industry by 10%. Total volume of cash injections will amount to 225.6 billion kroner ($ 28 billion).

Of this sum, 121.2 billion kroner will be taken from the wealth fund. To compare, the authorities used 95.7 billion kroner in 2016. At the same time, in spite of clear signs of economic recovery, the growth rate is expected to fall to 0.4% (according to analysts, growth in will number 1,1%), Bloomberg reported.

Management of the wealth fund is experiencing increasing pressure from the government, which is trying to achieve its goals with record-low interest of credit. In the following year, the fund profits from dividends, real estate and securities are expected amount to 207.5 billion kroner, which, according to the budget plan, should cover the increasing costs. 

"Norway will become stronger with currently undertaken economic restructuring", - said the Minister of Finance Siv Jensen. According to Jensen, the budget for 2017 is focused on combating unemployment in the regions and sectors most affected by the drop in oil prices.

The government predicts a decrease in oil and gas production on the background of rising oil prices in 2017.

Investments in offshore production will be reduced by 10% in 2017, and by 6.8% in 2018, continuing a two-year drop.

The authorities will reduce the tax burden by 6.5 billion Siv Jensen. Taxes on corporate profits will be reduced further. About 4 billion crowns will go to support the labor market.

"Incomes policy is very close to forecast of Norvay’s central bank, so the budget will not affect monetary policy - said Gaute Marius Langeland, an analyst at Nordea Bank in Oslo. - But it's just a guess. The government of minority may have to change something to get support of other parties in parliament. However, the signals received from these parties do not assume that final budget will be significantly different."

7 October, Norway Statistics Service published another report, which showed that national income in the second quarter declined year on year by 2.3% and amounted to $ 328 billion ($ 336 billion in 2015).

The main reason for declining revenues is sluggish activity of crude production on the continental shelf, and reduction of tax revenues (by 8.3%).

Income from oil production in April - June amounted to only $ 23 billion, according to The Norway Post. Furthermore, costs increased to $ 333 billion, which is by 8% higher as compared to 2015. 

source: reuters.com, bloomberg.com






Science & Technology

Fast Company: Apple isn't the most innovative anymore

U.S. Space Program Could Be Delayed Due To SpaceX, Boeing Design Risks: Reuters

What trends will be affecting the health sector in the coming years?

Deloitte identifies main cyber threats for power industry

Zenuity To Take Self Driving Car Road Test In Sweden With Permission

Researchers: Half of Facebook users is fake

Amazon’s Ring gets in a privacy scandal

Facebook Is Creating A Stablecoin For Its WhatsApp Users

IBM offers to use the first quantum computer

Passport Numbers Of 5 Million Customers Hacked: Concedes Marriott

World Politics

World & Politics

AirHelp expects up to 33 th of cancellations and flight delays per day all over the world in 2019

Far-right and Catalonia: New elections in Spain

Trump is losing rating because of shutdown

Hanoi, Vietnam Chosen As Place For 2nd Summit Between Trump And Kim Jong-Un

US, China to hold new negotiations in Beijing

Human Rights Not To Be Dissociated From Stability, Macron Tells Sisi

Brexit Hijack Is Not The Parliament’s Right

Macedonia ignites political crisis in Greece