Feb 3, 2023
Norway to Boost Budget Spending Due to Higher Prices and Wages
(Bloomberg) -- Norway’s government is preparing to raise spending in its 2023 budget to adjust for higher price and wage growth, according to Finance Minister Trygve Slagsvold Vedum.
The spending increase is needed to prevent the budget from being “significantly tighter than was intended,” Vedum said in a statement on Friday, while pledging to retain budget discipline. The changes will be proposed in the revised national budget, due to be presented in May.
“If we do not do this, the activities in hospitals, the police, schools and other important services will be lower than the budget allowed for,” the government said, while acknowledging that such adjustments are unusual during the budget year.
The move runs counter to the Labor-led government’s policy of seeking to trim spending of Norway’s fossil-fuel wealth to avoid fueling price growth. Inflation remains near a three-decade high and the Norwegian economy may face a recession this year.
In the budget prepared last October, the government had projected consumer-price growth of 2.8% for this year, with wages seen growing 4.2%. The central bank expects inflation of 4.8% and wage growth of 4.7% in 2023, according to its December forecasts.
--With assistance from Jonas Cho Walsgard.
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