Norway’s budget balancing act will be harder to follow in decades ahead, warns report

Norway’s budget balancing act will be harder to follow in decades ahead, warns report
Photo by Elwin de Witte on Unsplash
Dark clouds may be forming on Norway’s financial horizon due to an ageing population and diminished income from oil and gas, according to a new report released on Friday. But the government remains optimistic about the country's future.

The government on Friday published its Long-term Perspectives on the Norwegian Economy. The White Paper, published and presented to parliament every four years, outlines the key expected developments and challenges Norway will be facing in the next 40 years.

The report stresses that while expenses are estimated to increase in the decades ahead, revenue will trail behind. The reasons are linked to a steadily ageing population, diminishing growth in the sovereign wealth fund and waning income from the fossil fuel industry, which Norway relies heavily on.

“While today there are four people in work for every person retired, this will have dropped to two by 2060,” said Minister of Finance Jan Tore Sanner in a statement.

“This means increased expenses associated with pensions and health and care services, without a corresponding increase in tax revenue. In addition, income from the oil and gas sector will decline,” he added.

The White Paper projects that low oil prices may mean 50,000 to 90,000 fewer jobs in the sector in the next ten years.

Norway’s Prime Minister Erna Solberg says the government is planning on tackling these issues through increased private sector growth.

“The government’s most important strategy is getting more people to work. In order to do this, we need more private sector jobs and we have to ensure that people can participate,” she said.

“A strong, diverse and green business sector is crucial to secure jobs for people and solid growth in our standard of living in the time ahead,” Solberg said.

Yet the government stresses that Norway is well prepared to tackle the challenges ahead.

“Norway has the best starting point to manage these issues,” said Sanner. “We have a high degree of trust in our society, we have advanced far in the digital transformation and we have relatively high rates of employment, low unemployment and a well-functioning work sector.”

The reassurances by Norway’s ruling Conservative Party have been met with scepticism by some members of the opposition.

“We must and can expand the welfare state, if we redistribute from private wealth to public welfare,” said financial spokesperson for the Socialist Left Party, Kari Elisabeth Kaski.

“We can afford this if we get an economically responsible party at the helm, rather than the Conservative Party,” she added.

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