The oil fund has grown strongly since the new year. It gives the government much more money to spend, when the state’s expenses for 2024 are to be financed. But Finance Minister Trygve Slagsvold Vedum is strongly warned against approaching the rule which states that you can use 3 per cent of the fund a year over time. That will make the central bank’s job even more difficult. – If you now have a sharp increase in spending, it will lead to the central bank setting a much higher interest rate, says Professor Steinar Holden. He is head of the economics department at UIO. Steinar Holden is a professor at UIO and head of the Department of Economics. Photo: Wilhelm Sverdvik Everyone got worse advice except the state In last year’s state budget, the government tightened spending too much. Taxes and duties were sharply increased, while the estimate for how much prices would rise in 2023 turned out to be far too low. Both households, companies and the public sector have received worse advice. At the same time, an already rich state has become even richer. – You probably shouldn’t have such a strict policy as you started with last year, says Holden. Criticism of the government rained down after the budget and the result was a sharp increase in spending in the revised budget in May. Now the experts are warning the government against going into the opposite ditch, where the money tap is opened wide. – The most important thing is that they last well, says Holden. Harald Magnus Andreassen is chief economist at Sparebank 1 Markets. He sat on the Sverdrup committee which advised the Storting on what will be important for the fund in the coming decades. Photo: Lise Åserud The fund covers a fifth of the government’s expenses Last year, withdrawals from the Oil Fund covered every fifth kroner that the government had in expenses. This year, the fund has increased even more in value. The fund has become so large that the government can increase spending enormously and at the same time stay well within the rules for withdrawals. – Next year, the action rule will allow room for spending NOK 460-470 billion. That is almost 100 billion more than the budget for 2023 planned to spend. I don’t think that room for maneuver will be used up, it is far too large. The use of money should be well below 3 per cent of the Oil Fund’s value, says chief economist Harald Magnus Andreassen at Sparebank1 Markets. – I am very excited about the budget. When you see what Norges Bank is doing to slow down the economy, it would not be smart if the budget contributes to increasing activity in the economy. In the end, the answer will be that Norges Bank raises interest rates more, he says.
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Warns Vedum against “robbing” the Oil Fund – news Norway – Overview of news from various parts of the country
