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

Scientists Discover Largest Ever Under Water Volcanic Eruption Near New Zealand

Bitcoin craze increased load on the power grid to the maximum

PC And Server Performance Slows Down Due To Security Patches For Chip Flaws, Says Microsoft

Cybersecurity Firm Claims Cryptocurrency Monero Might Be Getting Funneled To North Korea University

The Way We Travel Will Be Changed by The Colorless, Odorless Gas - Hydrogen

EU's Big Change In Data Protection Rules Makes Businesses To Get Ready For It

Artificial Intelligence Helps NASA Find An 8th Planet In Orbit Of A Distant Star

Australian Research Success Could Mean Shatterproof Cell Phones Could Soon Be A Realityv

Top ten hi-tech events of the year

Tesla Considering Designing And Developing AI Chips On Its Own To Support Its Auto-Pilot Project

World Politics

World & Politics

Take and go away: new approach to refugees in Europe

Both The Korean Countries Will Come Together In Olympic Talks

Parties of Germany agreed on the migrants problem

Munich Re: Natural disasters caused record damage in 2017

High-Level Talks To Be Held Between North And South Korea In Over Two Years

Sexually Abusing Children Interests An Estimated 20,000 British Men, Shows Police Monitoring Of Chat Sites

2018 Could See An Increase In Terror Attacks Where Both ISIS As Al-Qaeda Continue To Present Threats

What will happen to European populism in 2018?