The outgoing Norwegian government presented its 2022 budget this morning, which includes a plan to use less of the country’s oil revenue-based sovereign wealth fund than in the current year – but the withdrawal is still set to be the SWF’s third largest ever.

The Norwegian Ministry of Finance announced this morning that the economic crisis was over, and that in the 2022 budget it was proposing measures to safeguard sustainable growth, while normalising fiscal policy and the withdrawal from the Government Pension Fund Global (GPFG).

It announced that the structural non-oil fiscal deficit – the amount of the GPFG the government intends to use to finance the budget — was estimated at NOK322.4bn (€32.7bn) in 2022.

This, it said, equalled 2.6% of the expected capital of the GPFG at the beginning of the year, down from the 3.6% used in this year’s public spending.

Finance Minister Jan Tore Sanner, a member of the Conservative party, which was defeated in last month’s general election, said: “We will bring the structural non-oil deficit down well below the 3% estimated real return on the GPFG.”

Norway sets a fiscal rule on its petroleum revenue spending, according to which over time, oil revenue spending can equal the expected real return on the GPFG, which is estimated at 3%.

“The budget is well adapted to the current cyclical position of the Norwegian economy and makes us more robust to future shocks,” Sanner said.

The structural non-oil fiscal deficit was being reduced by 2.6% of GDP, the ministry said, “mainly due to the termination of the extraordinary and temporary COVID-19 economic policy measures”.

The planned NOK322.4bn of spending from the GPFG is down 21% from this year’s NOK397.2bn, and lower than 2020’s NOK364.9bn, according to government figures, but it is still the third largest annual withdrawal in the SWF’s history.

Kyrre Aamdal, senior economist at DNB Markets, commented: “The budget will be significantly changed by the incoming government, but the economic forecasts will probably not be changed.

“The total use of oil money (the structural, non-oil deficit) will probably not be changed that much by a new government,” he said.

Norway’s Conservative party conceded defeat following the 13 September parliamentary election, in which a coalition of Labour, the Centre Party and the Socialist Left party gained a majority of seats.

However, the latter has now pulled out of the pact, and Labour leader Jonas Gahr Støre is forming a minority government with him as prime minister.

Aamdal said the new government would present a new budget proposal with changes in a number of items in the first half of November.

Looking for IPE’s latest magazine? Read the digital edition here.