The corona pandemic causes oil money use to increase in the budget and Norwegian economy to shrink.
The government has now planned to use 4.2 per cent of the oil money this year instead of 2.6 per cent.
As a rule, the use of oil money should not exceed 3 per cent of the value of the oil fund. In times of crisis, there is also room to spend more of the oil revenues.
For 2020, oil money use will increase from NOK 243.6 billion in the original state budget to NOK 419.6 billion in the revised budget.
-The bill is high, we spend a lot of money, and we should also be aware that when we spend more money now, it means we can spend less in the years to come. However, the alternative would have been even more bankruptcies, even more unemployed and even further damage for the Norwegian economy, Finance Minister Jan Tore Sanner said on Tuesday.
Economy Will Shrink
The Norwegian economy is also expected to shrink by 4 percent this year.
The unemployment rate is expected to be 5.9 per cent this year, compared to 2.2 per cent in 2019. The government adds that Norway has the highest registered unemployment rate in 75 years.
The government’s total net cash flow from the petroleum industry was NOK 257 billion in 2019, and is estimated to close to NOK 98 billion in 2020. The estimate for 2020 is around NOK 159 lower than in 2019. This is mainly due to lower oil and gas prices and the Covid-19 pandemic.