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Monday, June 17, 2024

Budget talks off to a ‘tough’ start

Prime Minister Erna Solberg knew this year’s state budget conference would be “tough” even without all the political conflict swirling around her. Her government can’t justify dipping into Norway’s Oil Fund any longer to grease the way for more government spending, and mostly has to “move around” the money it already has.

Prime Minister Erna Solberg had a lot of questions to answer after her hand-picked president of the Parliament was forced to resign last week, and she was facing more during and after the state budget conference. PHOTO: Statsministerens kontor

That’s a lot, given the country’s tax base and recovering economy, but it’s the recovery itself that’s forcing more savings. The days of expansive economic policies and increased government spending, to offset the downturn caused by the dive in oil prices four years ago, are over.

“It will be a tough budget conference,” Solberg told news bureau NTB when she arrived at the hotel in Hurdal, about an hour’s drive north of Oslo, Monday morning. By the time her ministers wrapped things up on Wednesday they’d also had to deal with fallout from last week’s forced resignation of the president of the Norwegian Parliament, over massive budget overruns on a construction project, and a public uproar over Justice Minister Sylvi Listhaug’s political posturing.

The conflicts created by both, and criticism over how Solberg handled them, were lurking in the background through the government’s first three days of number-crunching. It was the start of the lengthy process that culminates with Finance Minister Siv Jensen’s delivery of the government’s proposed budget in October.

The paradox now is that government spending must be limited because Norway’s economy and the prognosis for it is better than expected. “Good economic times demand moderation in the state budget,” Solberg said, “so that we don’t contribute to higher interest rates and a stronger krone.” That would hurt both exports and competitiveness, along with households with large mortgages.

It means the minority non-socialist government ministers from Solberg’s Conservatives and the Progress and Liberal parties will have to fight over how to divvy the pot up among their various ministries and pet programs. Solberg said they had to set tough priorities and that no one could expect more money than they got last year, more likely less.

The Parliament’s building scandal has already resulted in another NOK 500 million (USD 65 million) in budget overruns that will have to come from somewhere. The scandal itself has sparked anger and damaged public confidence in the Parliament itself, and in Solberg’s judgment when she continued to support President Olemic Thommessen who was responsible for handling the crisis.

She was facing questions in Parliament as soon as the budget conference ended. Berglund



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