Oil Fund tapped for more crisis aid

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Norway’s government is once again dipping into the country’s huge sovereign wealth fund to cover billions worth of more financial aid for Corona crisis-hit businesses, local governments and individuals. Opposition politicians are keen to dip even deeper, to preserve jobs and ward off bankruptcies.

Finance Minister Jan Tore Sanner stressed how the government needs to be prepared to respond to various scenarios as the Corona crisis continues. PHOTO: Regjeringen.no

“We are lucky in Norway, very, very lucky,” Finance Jan Tore Sanner told Norwegian Broadcasting (NRK) after rolling out a new round of Corona crisis relief measures on Friday. While most other countries are going heavily into debt to fund crisis aid, Norway has one of the world’s largest “piggy banks,” built up by saving most of the country’s oil revenues over the past 25 years.

“It does mean that we’re borrowing from future generations,” Sanner added, since the so-called Oil Fund is meant to finance pensions in a post-oil era. Sanner noted, however, that it’s also important that Norway’s industrial base and important businesses survive the Corona crisis, so that Norwegians will still have jobs to go to both when the crisis eases and in the future.

Aiming to ‘be prepared’
Sanner stressed a need to “be prepared” for whatever course the crisis takes, since the virus and its effects are so unpredictable. He and Prime Minister Erna Solberg pointed to three various scenarios, taking into account vaccine availability, whether the dreaded British strain of the virus can be contained in Norway and whether public support for containment measures will continue.

In the best-case scenario, vaccinations can proceed, the new strain of the virus will be controlled and restrictions can be eased. In a worst-case scenario, there won’t be enough vaccine, the new strain will spread and Norwegians will stop respecting measures aimed at preventing infection. Solberg thinks Norway will land somewhere between best-case and the middle level, in which vaccine deliveries are delayed, the new strain is controlled but the infection threat remains with most of the population unable to be vaccinated until late in the year.

Proposing use of an extra NOK 16.3 billion
Planned extra spending on compensation for losses caused by Corona virus containment measures is set at NOK 16.3 billion (roughly USD 2 billion). The government is also raising the amount of compensation to cover 85 percent of permanent monthly costs for Corona-hit businesses through June, up from 80 percent. That’s estimated to cost NOK 4 billion alone.

The government is also earmarking, among other things, an extra billion kroner for local governments. NOK 500 million is meant to help cover their increased costs of Corona, with another NOK 500 million that they in turn can dole out to specific businesses in their area that need extra help.

At least NOK 1.5 billion is proposed to help save Norwegian Air from bankrupcy and another NOK 4.2 billion in aid to the aviation in general. Aid packages proposed on Friday, all of which will need approval from Parliament, also include aid to students who’ve lost part-time jobs, more support for long-term unemployed, the hard-hit entertainment and travel industries, new business development and even NOK 500 million for summer school programs. Struggling businesses and individuals can also apply to postpone tax payments.

“This is all a lot of extra spending,” Sanner said, “but it’s necessary in the situation we’re in now.”

Read the government’s full list of aid proposals here (external link).

The government already looked likely to face more opposition in Parliament, though, from parties that want to spend even more money in an election year, and cover the expenditures with more withdrawals from the Oil Fund. Sanner and Prime Minister Erna Solberg have addressed earlier demands from Parliament and included many proposals from oppositions parties in the new crisis aid package.

Labour Party leader Jonas Gahr Støre said he was “surprised” by how much the government actually went along with, but Labour, the Center Party, the Socialist Left party (SV) and, surprisingly, the conservative Progress Party think more aid is needed.

“We want to strengthen the crisis package because it lacks a lot,” Sigbjørn Gjelsvik, finance policy spokesperson for the Center Party, told newspaper VG. Several of the opposition parties were disappointed that the government hasn’t proposed extending unemployment benefits from July 1 to October 1, for example, and also think Norwegian Air should receive more state support.

The government is expected to negotiate first with the Progress Party, its former coalition partner. “We’ll spend the weekend going through all the proposals,” Sylvi Listhaug of Progress told VG. She thinks more aid is needed “in light of how things (Corona infection risk and delays in the vaccination program) have become much worse.”

NewsInEnglish.no/Nina Berglund