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ECONOMY

OECD praises Norway over strong economy

Norway has weathered the economic crisis well thanks to its oil riches but must be careful to avoid a property bubble, the OECD said on Wednesday.

"Norway continues to benefit from its well-managed petroleum wealth and sound macroeconomic policies," the Organisation for Economic Cooperation and Development said.

"The strength of the economy and prudent supervision have helped the financial system to weather the financial crisis well," it added, noting that "the macroeconomic policy challenge has shifted towards preserving the momentum of growth."

Norway, the world's seventh-biggest oil exporter and second-largest natural gas exporter, places its oil and gas riches in a huge pension fund, which it in turn invests in international stocks and bonds.

Under current rules, the government can use only a limited amount of that money — four percent of the total value of the fund — to balance its budget, which would otherwise post a deficit.

Noting that Norway was to use "just under four percent" this year, the OECD said in a review of the economy that "there would be room within the fiscal guidelines to go for stronger expansion should economic activity turn out to be significantly weaker than projected."

Norway, which is not a member of the European Union, is expected to show growth of 2.7 percent this year excluding oil and gas and shipping revenues, and of 3.6 percent in 2013.

In 2011, growth was 2.6 percent.

However, in the event of an intensification of the eurozone crisis, Oslo should use monetary policy — rate cuts — as its main weapon, the OECD said.

The organisation hailed Norway's central bank which last year suspended a cycle of tightening its key rate, then lowered it by half a point in December. It now stands at 1.75 percent.

The relatively low rate could however lead to a rise in housing costs, and the OECD, like the International Monetary Fund last week, warned against high household debt and elevated housing prices.

"The strong financial supervision system should be maintained, including by ensuring that banks comply with higher capital requirements," the OECD said.

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MONEY

Italy expands €200 payment scheme and introduces public transport bonus

Italy's government will extend its proposed one-time €200 benefit to more people and introduce a €60 public transport payment, Italian media reported on Thursday.

Italy expands €200 payment scheme and introduces public transport bonus

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ will be added to the categories of people in Italy eligible for a one-off €200 payment, ministers reportedly announced on Thursday evening.

The one-time bonus, announced earlier this week as part of a package of financial measures designed to offset the rising cost of living, was initially set to be for pensioners and workers on an income of less than €35,000 only.

However the government has now agreed to extend the payment to the additional groups following pressure from Italy’s labour, families, and regional affairs ministers and representatives of the Five Star Movement, according to news agency Ansa.

Pensioners and employees will reportedly receive the €200 benefit between June and July via a direct payment into their pension slip or pay packet.

For other groups, a special fund will be created at the Labour Ministry and the procedures for claiming and distributing payments detailed in an incoming decree, according to the Corriere della Sera news daily.

One new measure introduced at the cabinet meeting on Thursday is the introduction of a one-time €60 public transport bonus for students and workers earning below €35,000. The bonus is reportedly designed to encourage greater use of public transport and will take the form of an e-voucher that can be used when purchasing a bus, train or metro season pass.

Other provisions reportedly proposed in the energy and investment decree (decreto energia e investimenti), which is still being adjusted and amended, include extending energy bill discounts, cutting petrol excise duty and rolling on the deadline to claim Italy’s popular ‘superbonus 110’.

The €14 billion aid package, intended to lessen the economic impact of the war in Ukraine, will “fight the higher cost of living” and is “a temporary situation”, Prime Minister Mario Draghi has said.

The Local will report further details of the payment scheme once they become available following final approval of the decree.

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