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Monday, May 27, 2024

Solberg launches huge crisis fund

Prime Minister Erna Solberg is now offering a Corona crisis fund worth at least NOK 100 billion (USD 10 billion), with half of it earmarked for small- and medium-sized businesses and the other half for large companies. The goal is to help them survive the country’s worst economic downturn in many years.

There they were again, on a Sunday evening, holding their latest near-daily press conference tied to the Corona virus crisis. This time Prime Minister Erna Solberg and Finance Minister Jan Tore Sanner were launching a NOK 100 billion plan to help Corona-stricken businesses boost their liquidity. PHOTO: Statsministerens kontor/Eirin Larsen

“We are in a crisis,” Solberg declared at a press conference Sunday evening. She spoke just after King Harald V also spoke to the nation in a surprise and serious address at the top of Norwegian Broadcasting (NRK) national nightly newscast. The king’s address sent a strong message about just how serious the situation is, as Corona containment measures that have all but shut down the country ravage Norway’s otherwise strong economy.

In addition to the containment measures, Solberg and Finance Minister Jan Tore Sanner announced their latest initative aimed at providing hard-hit companies with needed liquidity. The Corona virus has crippled a wide range of businesses, with airlines, hotels, other tourism-related firms, restaurants and most all cultural events hurting the most. Norwegian Air and Scandinavian Airlines (SAS), for example, have seen ticket sales come to a halt and they’ve had to cancel thousands of flights.

State guarantor for loans
“They’ve seen their revenues vanish overnight,” Solberg said. The state is thus trying to ride to the rescue, with earlier tax relief measures and a pledge to cover 60 percent of laid-off employees’ salaries after just two days at employer expense. That can help, especially if opposition parties in Parliament prevail in their desire to fully cover salaries for workers on furlough. Several parties have complained, as have labour organizations, that workers were otherwise getting stuck with too much of the Corona bill.

Now Solberg is also proposing two programs in which the state would act as guarantor for loans up to NOK 50 billion for small businesses and revive a state bond and lending fund for big business valued at another NOK 50 billion. The money would inject ailing companies with needed cash to avert what Solberg has called “unnecessary bankruptcies and job losses.”

The state is also deferring the social welfare tax that Norwegian employers pay on behalf of each employee (called arbeidsgiveravgiften) that’s due on May 15, while promising “more and more expansive” measures as needed, also some to stimulate the economy as a whole.

“It’s important that we all get through this (crisis) together,” Sanner said, adding that the goverment wants to preserve jobs and make sure that “the largest portion of Norwegian companies possible survives” the Corona crisis.

‘Limit the outbreak, protect the economy’
Solberg stated that “the most important job … is to limit the outbreak of the Corona virus as much as possible to save lives.” The next most important is to protect Norway’s economy, which has been strong for many years. Norway, with its low unemployment, affluent society and huge sovereign wealth fund is already considered to be the best-equipped to deal with a crisis. That doesn’t mean all companies will survive when revenues dry up.

Sanner said the government understood and sympathized with companies that “experience suddenly having little or not income as a result of the virus, but also have bills they must pay. They can quickly come into a liquidity squeeze, because accounts are emptied.”

The chief executive of hard-hit Norwegian Air, for example, said the situation was “like suddenly being caught in a war without bombs and grenades.” On Sunday SAS reported that it was faced with having to lay off around 90 percent of its staff, around 10,000 people, after cutting most all its flights. Norwegian, SAS and domestic airline Widerøe together generated average revenues of around NOK 3.4 billion a month, and most of that has evaporated with the Corona crisis that has all but  halted air travel.

As of Sunday night, a total of 1,077 people in Norway were registered as infected with the Corona virus, with the death toll still at three. Parliament is due to debate the government’s crisis packages on Monday, and may demand that even more state funds are tapped to bail out businesses. Berglund



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