IMF presents its views on the Norwegian economy

A mission from the International Monetary Fund (IMF) has today presented its views on the Norwegian economy and Norwegian economic policy. The mission is in Oslo as part of its article IV-consultation with Norway.
“The mission’s statement is an important contribution to the domestic debate on economic policies. IMF notes that the economic policies implemented by the Norwegian Government have been effective in counteracting the financial crisis”, says finance minister Sigbjørn Johnsen.
IMF concludes that the Norwegian economy has weathered the global financial crisis remarkably well. The IMF emphasises that fiscal and monetary easing and specific measures aimed at the financial sector have contributed to mitigating the negative impact on growth and to keeping unemployment low through the crisis. The mission also points out that the structure of the Norwegian economy has played an important role in dampening the downturn.
Looking ahead, the IMF expects growth in the Norwegian economy to pick up, underpinned by increasing private sector demand. However, the mission underscores that the forecast is uncertain.
As economic prospects improve, the IMF recommends that the authorities return to the 4 percent-path for use of petroleum revenues (the fiscal policy rule), preferably in the current term of Parliament. This will allow increase fiscal space and strengthen the ability to meet public expenditures related to an ageing population. The IMF underlines that both the authorities and social partners have a responsibility to ensure that the competitiveness of the Norwegian economy is strong.
“I agree with IMF’s conclusions on fiscal policy. It is important that we return to the 4 per cent path. This will ease the situation for the export-oriented sector, and also help ensure that oil revenues are distributed fairly across generations”, says Sigbjørn Johnsen.
In the statement, the IMF welcomes the Norwegian pension reform but also emphasizes that better work incentives within the sickness and disability schemes also will contribute to fiscal sustainability.
The IMF considers monetary policies to have been appropriate, and sees the Norwegian financial sector as sound.
“I agree with the IMF in calling for an international reform of the rules and regulations for the financial sector. I also agree with the need to strengthen international co-operation to improve surveillance of systemic risk”, says Sigbjørn Johnsen. Norway participates in international efforts related to these issues.
In the coming months, the IMF delegation will complete a more extensive report on the Norwegian economy for discussion in the IMF Board.

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