Norway's 2023 Budget Reflects Tighter Fiscal Policy, Slower Growth

MOSCOW (UrduPoint News / Sputnik - 06th October, 2022) Norway's left-wing minority government unveiled its 2023 budget proposal on Thursday that aims to tighten fiscal policies to curb rampant inflation and help economy recover faster from the global energy crisis.

"The Government aims to bring inflation under control and ease the pressure on interest rates, while promoting job security and reducing social and geographical differences," Finance Minister Trygve Slagsvold Vedum said.

The draft budget, subject to parliamentary revue, forecasts growth in the non-oil economy at 2.9% in 2022, 1.7% in 2023 and 2% in 2024, in a stark contrast to 4.1% growth reported last year and 3.6% seen in May.

Inflation has not been higher since the 1980s and is expected to reach 4.

8% in 2022 before settling at 2.8% in 2023.

The government said economic growth appeared to be decelerating faster than previously anticipated. It suggested redistributing record high oil and gas revenues to reduce spending from the sovereign wealth fund by 18.3 billion krone ($1.7 billion) to 316.8 billion krone in 2023.

"For a long time, the response to many political challenges in Norway has been to increase spending from the fund. That time has passed," the finance minister said.

Vedum warned that tapping the Government Pension Fund Global would risk inflation becoming entrenched, mortgage rates higher and the population poorer. The cut in spending from the fund will be offset by higher government expenditure, including on energy subsidies.