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Friday, July 12, 2024

Budget battle begins, cuts loom

While thousands of people streamed to Holmenkollen in Oslo on Sunday, for a sunny afternoon of ski jumping, Norway’s government ministers headed out of town. They’ll be jumping through fire for the next two days, at a difficult annual conference where they must hash out the next state budget. This year may be more difficult than ever.

NEWS ANALYSIS: One by one, the ministers’ black chauffeur-driven cars started arriving Sunday afternoon at the appropriately modest Thorbjørnrud Hotel in Jevnaker, about an hour north of Oslo.

The ministers always try to put on a happy face as they step out of their cars, and later assemble for a traditional “family photo.” The conference can quickly amount to the worst few days of a ministers’ year, however, reportedly reducing some ministers to tears when faced with losing funding for their projects.

Finance Minister Sigbjørn Johnsen spoke again over the weekend about how public expectations challenge the government's need to be careful with Norway's oil money. PHOTO: Arbeiderpartiet

Tearful scenarios seem more likely than ever this year, given recent political rhetoric and leaks to the local press about threatened budget cuts. Finance Minister Sigbjørn Johnsen has been trying to set the stage and lower expectations for months.

Johnsen, a Labour Party veteran, said shortly after last fall’s election that state spending must slow down. Government stimulus packages aimed at protecting Norway from the global finance crisis now need to be reined in, and the public must no longer use so much oil money, he claims. Otherwise inflation will rise, as will interest rates, making it even harder for Norwegian industry to meet foreign competition.

It’s not easy for Johnsen to gain understanding for his views. Norwegians are used to hearing that they live in one of the wealthiest countries in the world, and they have hundreds of billions of kroner saved up for future generations already. In the meantime, much of Norway’s infrastructure has been neglected for years and the public is clamoring for everything from better schools to shorter waiting lists for health care. Both the public and many politicians (including those in the opposition Progress Party) want to invest more of their oil money in roads and trains and nursing homes, for example, instead of stashing it in the country’s famous “Oil Fund,” which just reported huge gains.

Turf battles
So each member of Prime Minister Jens Stoltenberg’s government has his or her own turf to protect, and hopefully enhance, at the budget conference. All of them were expected to agree on general terms for the budget, and even that spending must be cut, but then the turf fighting would begin.

Former Prime Minister Kjell Magne Bondevik, who went through several such budget conferences of his own, offered insight into the difficult process in a column in newspaper Aftenposten over the weekend. All the ministers, he predicted, were likely “quite nervous” on their way to the conference. Their prestige is at stake, the feared bureaucracy of the finance ministry will be looming in the background and when the verdicts fall on Tuesday, they’ll have to put on a brave face and keep still about it for months, until the final state budget proposal is formally presented in October. Bondevik wrote that it’s during the coffee breaks that he’s seen some ministers break down in tears.

Jens as referee
Stoltenberg of the Labour Party has the tough job of trying to find compromises, not least with the two other party leaders making up his coalition government. He couldn’t have picked a better Finance Minister to play the tough guy, though, than the affable Johnsen, who was brought back to the halls of government just a few years before retirement and isn’t up for re-election.

Johnsen does need, though, to maintain Labour’s credibility and avoid accusations that the government is failing to keep promises made during last year’s election campaign. Health care, transport, the schools and care for the elderly are supposed to remain high priorities. This fall the public will learn whether Stoltenberg’s re-elected government will put its money where its mouth is.

Views and News from Norway/Nina Berglund
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