The mission team of the International Monetary Fund (IMF) today presents a  preliminary assessmentof the Norwegian economy. The report states that the macroeconomic performance and policies of recent years remain admirable. It warns against excessive use of petroleum revenues. According to the IMF team, the petroleum revenues may also lead to a failure to introduce necessary reforms to increase economic growth in Norway. At the same time, the mission team points to tax decreases as a possible mean to a more efficient economy.

The IMF mission team considers the fiscal stance for next year appropriate, given the expected cyclical slowdown internationally. However, the IMF is worried about a too large spending of petroleum revenues in the longer term. The guidelines for economic policy, supported by a majority in the Storting, plan for spending the expected real return on the Government Petroleum Fund. The IMF says that the increased use of petroleum revenues should mainly be devoted to tax cuts to contribute to a more efficient economy and increased economic growth. The need to increase the efficiency of public spending is emphasised, and the aim of a medium-term reduction in the public spending ratio is supported.

- I appreciate the IMF’s advice of reducing the tax level and the public spending ratio, and of making the public sector more efficient, says Minister of Finance Per-Kristian Foss. I notice the support of central elements of Norwegian economic policy and appreciate the positive assessment of the Norwegian economy. At the same time, we must take the warning against excessive spending of petroleum revenues seriously, continues the Finance Minister. He stresses the importance of adherence to the new fiscal rule.

The mission team also welcomes the adoption of an inflation targeting framework. In its report, the IMF states that the new framework, with an inflation target of about 2^2 percent, will contribute to nominal exchange rate stability in the medium term, provided that fiscal policy is not too expansionary.