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Thursday, July 18, 2024

More billions roll into crisis funding

NEWS ANALYSIS: It took years of debate before Norwegian politicians agreed to spend a few billion kroner on projects like a new gateway airport or national museum. Now those pricetags seem like small change compared to the hundreds of billions of state funding committed during just the past two weeks, to offset the ill effects of the Corona virus crisis.

Opposition politicians (from left) Sylvi Listhaug of the Progress Party, Labour’s Hadia Tajik and Trygve Vedum of the Center Party, after approving another huge Corona crisis aid package in Parliament Tuesday morning. The crisis itself continues to receive heavy media coverage. PHOTO: NRK screen grab

Norway’s Parliament and government rolled out their latest so-called “crisis package” since mid-March on Tuesday. They negotiated late into the night, but emerged with a large majority of the parties backing their new crisis aid programs “whole-heartedly,” according to one finance committee member. The small Greens and Reds parties, which hold just one seat each in Parliament this session, were the only hold-outs: Reds leader Bjørnar Moxnes doesn’t think the package offers enough assistance to industry and suddenly laid-off workers who don’t have enough savings to pay their rent, while the Greens don’t think the package is good enough for the climate or environment.

All the other party leaders seemed pleased as could be, after they once again sweetened initial crisis aid proposals put forward by the government late last week. They specifically addressed liquidity problems hitting businesses ordered to shut down by the government’s own Corona containment measures. The state will now, with the Parliament’s blessing and enhancements, offer to cover up to 100 percent of the fixed costs (like rent, insurance premiums and electricity bills) faced by the most-affected businesses (hair salons and barber shops, athletic facilities, restaurants, bars and other enterprises ordered to close).

That’s expected to cost up to NOK 20 billion per month, with the state willing to provide funding at least through the end of May. The goal is help ensure that businesses now closed will reopen when the Corona virus is brought under control, and that laid-off employees (who will receive a large portion of their wages for at least 20 days, thanks to an earlier crisis package) will still have a job to which they can return.

More billions to local governments, students…
Now another NOK 5 billion (USD 480 million) is being offered to Norway’s kommuner (local governments around the country) to help compensate them for costs of the Corona crisis. Another NOK 1 billion has been set aside to convert college and university students’ loans to cash stipends to help them cover the costs of lost jobs or increased study time without going more heavily into debt.

The Parliament also will speed up investment in carbon capture and storage projects, and offshore wind power projects, with another NOK 400 million earmarked to retrain and increase the competence of workers who may not all get their jobs back when hotels, restaurants, athletic facilities or other currently shut-down businesses reopen.

Even more funding was earmarked for maintenance projects to improve Norwegian roads and railroads, and prevent landslides. The idea is to create work for construction firms that face a slowdown in the wake of the Corona crisis.

Corona aid funding approaches NOK 330 billion
The new crisis package is estimated to cost around NOK 8 billion (USD 770 million). That comes on top of around NOK 315 billion worth of crisis funding committed since the government first started shutting down Norway and asking people to say home on March 12.

“There’s no question all this will be expensive,” Hadia Tajik, a Member of Parliament and deputy leader of the Labour Party, said at a mid-day press conference at the Parliament. There’s wide political agreement, however, that compensation and economic stimulus measures are necessary to counter Norway’s strict Corona containment measures that remain in effect at least through the Easter holidays.

Finance Minister Jan Tore Sanner compared the Corona crisis to “a marathon we’re all running.” He was grateful for the support the government has received in Parliament. PHOTO: Statsministerens kontor/Eirin Larsen

Finance Minister Sanner of the Conservative Party was gratified by the support from opposition parties in Parliament and in turn went along with their funding enhancements. “This is a marathon we’re all running in,” he told state broadcaster NRK, “but I think the measures we’ve put in place are correct.”

So does Labour leader Jonas Gahr Støre: “We’re satisfied that we now have very concrete measures in place that will mean a lot for folks’ feelings of security.” He also claimed the Parliament had shown “great responsibility and willingness to cooperate.  Those of us in opposition have met the government in a constructive manner and they have met us.”

Even Sylvi Listhaug of conservative Progress Party at the other end of Norway’s political spectrum was satisfied: “In the situation the country is in now, it’s natural that everyone cooperates to bring Norway through this crisis. We all feel the responsibility we have.”

From restricting Oil Fund use to opening the taps
There has been some concern about all the money being spent, much of which will come right out of Norway’s Oil Fund, in which oil revenues have been invested for years to cover pensions for future generations. Tapping the fund has been limited, to just 3 percent of its total assets, with economists worrying that spending any more of Norway’s oil wealth would overheat the economy.

Newspaper Aftenposten also editorialized Tuesday against how the opposition in Parliament has been “overbidding” the government by consistently increasing the amount of financial aid offered. That can make the crisis worse, Aftenposten warned, especially if generous aid packages and unemployment benefits make it more attractive to accept state money instead of looking for a new job.

The politicians, usually so careful about tapping the Oil Fund, now seem to be opening the state’s wallet at every opportunity. The same politicians who firmly rejected the government’s tentative suggestion last year to dip into the fund to replace Norway’s sunken frigate and rebuild government headquarters, are now turning the taps wide open. They claim it’s absolutely necessary to keep Norway’s economy strong.

It may be harder in the future, however, for Norway to justify why it still hasn’t met NATO’s defense spending goals, or why it’s not offering more aid to the refugee crisis in Northern Africa and the Middle East. Norway at least remains fortunate that it has saved most of its oil revenues for the proverbial rainy day. With more than 300,000 Norwegians laid off from their jobs in the past three weeks, it’s pouring out there right now. Berglund



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