Norway revises government budget, structural budget deficit estimated to be NOK 221 billion

As widely expected, Norway revised government budget. The revised government budget is expansionary and a bit more than assumed in the budget from last autumn, noted Nordea Bank in a research report. However, this is right on Norges Bank’s projection.

This year’s structural budget deficit in the Revised government budget is estimated to be NOK 221 billion or 2.9 percent of the pension fund. This is NOK 5 billion lower as compared to the budget from last autumn. However, this does not signify that fiscal policy is less expansionary. The reduction of the budget in 2017 is because of a lower level in 2016, stated Nordea Bank.

The rise in the budget is larger. The rise in the structural deficit is estimated to be 0.5 percentage points of mainland GDP, 0.1 percentage points more than the autumn budget. This signifies that the budget is more expansionary than assumed in the budget last autumn. The central bank had anticipated this and expected a rise in deficit by 0.5 percentage points.