A budget to promote employment and welfare

“Unemployment has declined across the country, and employment growth is strong. I am pleased to see strong employment growth and that about 80 percent of the increase in employment has come in the private sector. This improves the sustainability of our welfare system,” says Finance Minister Siv Jensen.

With economic growth picking up and unemployment declining, the Government has moved to a neutral fiscal policy stance in recent years. The Government is continuing this responsible policy in the 2020 budget, supporting competitiveness, structural adjustment and private sector growth. The fiscal impulse for 2020 is estimated at -0.2 percentage points.

Given robust economic growth, the government has in recent years restrained the growth in public spending. “The fiscal policy stance has facilitated economic growth and encouraged job creation in the private sector,” says Finance Minister Siv Jensen.

The 2020 fiscal budget is well adapted to the economic situation. Spending of oil revenue amounts to 2.6 per cent of the Government Pension Fund Global. This is well in line with the fiscal rule, which states that when the economy is performing well spending should be kept below the long-term expected real return on the fund, estimated at 3 per cent.

In the budget for 2020 the Government continues its focus on transport infrastructure, research, technology and education. These policies will help reduce carbon emissions and foster growth in green industries.

The main features of the Government’s fiscal policy in 2020 are:

• Petroleum revenue spending, as measured by the structural non-oil deficit, is estimated at NOK 243.6 billion, equivalent to 7.6 per cent of mainland GDP. The fiscal impulse, as measured by the change in the structural non-oil deficit as a share of mainland GDP, is estimated at -0.2 percentage points.
• The non-oil deficit is projected to reach NOK 241.1 billion. This deficit is fully financed by transfers from the Government Pension Fund Global.
• The net cash flow to the Fund from petroleum activities is estimated at NOK 245 billion.
• Spending of petroleum revenues in 2020 corresponds to 2.6 per cent of the estimated capital in the Government Pension Fund Global at the beginning of 2020. This is below the expected real return of the Fund, estimated at 3 per cent.
• The real underlying growth in budget expenditure from 2019 to 2020 is estimated at 0.8 per cent, below projected real GDP growth in the mainland economy. In nominal terms, expenditure is projected to grow by 3.9 per cent.
• The consolidated surplus of the Fiscal Budget and the Government Pension Fund, including NOK 251.3 billion in interest and dividends, is estimated at NOK 255.2 billion.
• The general government financial balance is estimated at NOK 249.4 billion, equivalent to 6.6 per cent of GDP.
• The market value of the Government Pension Fund Global is estimated at NOK 9,500 billion at the start of 2020.

Read more: The Norwegian Fiscal Policy Framework

  
Key figures for the Norwegian economy. Percentage volume change from previous year

	Billion NOK1
	2018	2018	2019	2020	2021
Private consumption	1533.6	1.9	1.8	2.7	2.9
Public consumption	826.8	1.4	1.6	1.7
Gross fixed investment	851.5	2.8	6.1	1.2	-0.5
Of which: Petroleum extraction and pipeline transp.	153.4	1.9	17.8	-3.5	-10.4
Business sector Mainland Norway	311.0	6.8	6.2	3.4	2.7
Housing	193.5	-6.2	1.4	2.2	0.8
Public sector	192.7	7.5	1.3	0.3
Demand from Mainland Norway2	3057.6	2.0	2.1	2.2	2.2
Exports	1357.3	-0.2	2.3	7.3	3.5
Of which: Crude oil and natural gas	569.4	-4.8	-2.9	14.0	4.6
Goods except oil and gas	411.0	2.0	5.6	5.0	5.1
Services except oil, gas and shipping	247.2	4.4	5.3	5.0	1.6
Imports	1152.2	1.9	5.4	1.8	1.3
Gross domestic product	3530.9	1.3	1.8	3.8	2.3
Of which: Mainland Norway	2906.9	2.2	2.7	2.5	2.0
Other key figures:
Employment. 1000 persons		1.6	1.6	1.0	0.6
Unemployment rate. LFS (level)		3.8	3.5	3.4	3.4
Unemployment rate. registered (level)		2.5	2.2	2.1	2.1
Annual wage		2.8	3.2	3.6
Consumer price index (CPI)		2.7	2.3	1.9	1.8
Underlying inflation (CPI-ATE)		1.6	2.4	2.2	2.0
Crude oil price. NOK per barrel (level)		582	538	476	474
Three-month money market rates. pct.3		1.1	1.6	1.7	1.5
Import-weighted exchange rate (yearly change)4		0.1	2.0	0.5	0.0

¹ Preliminary national accounts in current prices.

² Excluding inventory changes.

³ Technically calculated using forward prices in September.

⁴ Positive number indicates a depreciation of the krone.

Sources: Statistics Norway, ICE, Norges Bank, Norwegian Labour and Welfare Administration, Reuters, Macrobond and Ministry of Finance.

 
Key figures for the Fiscal Budget and Government Pension Fund. NOK billion

	2018	2019	2020
1. Fiscal Budget
Total revenues	1 350.6	1 387.2	1 446.4
Revenues from petroleum activities	273.5	266.3	273.0
Revenues excl. petroleum activities	1 077.1	1120.9	1173.5
Total expenditures	1 318.1	1381.6	1442.6
Expenditures on petroleum activities	22.6	28.0	28.0
Expenditures excl. petroleum activities	1295.6	1 353.6	1 414.6
Fiscal budget surplus before transfers from the Pension Fund Global	32.4	5.6	3.9
Net revenues from petroleum activities	251.0	238.3	245.0
= Non-oil budget surplus	-218.5	-232.7	-241.1
+ Transfers from the Pension Fund Global	225.5	232.7	241.1
= Fiscal Budget surplus	7.0	0.0	0.0
2. Government Pension Fund
Net transfer to the Pension Fund Global	25.4	5.6	3.9
+ Interest and dividends on the Pension Fund1	225.0	236.7	251.3
3. Fiscal Budget and Government Pension Fund  consolidated surplus1	257.4	242.3	255.2

¹ Excluding capital gains or losses.

Sources: Ministry of Finance and Statistics Norway.

 
General government financial balance.¹ NOK million

	2018	2019	2020
Central government financial balance	308 447	266 990	276 528
Fiscal Budget surplus and Surplus in Government Pension Fund	257 445	242 257	255 167
Non-oil budget surplus	-218 513	-232 714	-241 084
Net revenues from petroleum activities	250 959	238 271	244 951
Interest and dividends on the Pension Fund	224 999	236 700	251 300
Surplus in other central government and social security accounts	-1 936	167	124
Definitional differences between Fiscal Budget and national accounts2	52 938	24 565	21 238
+ Local government financial balance	-19 771	-22 012	-27 093
= General government financial balance	288 676	244 977	249 435
In per cent of GDP	8.2	6.8	6.6

¹ Statistics Norway published new data for public finances on 20 September 2019, after the projections on public finances were finalised. The revisions in the latest publication are not included in the National Budget for 2020.

² Includes central government accrued but not recorded taxes. Direct investments in state enterprises, including government petroleum activities, is defined as financial investments in the national accounts.

Sources: Statistics Norway and Ministry of Finance.

See also:

• The National Budget 2020 - A summary (PDF)