Published Date : Oct 08, 2015
Norway is facing an economic slowdown, owing to which the government is cutting taxes and turning to its vast oil savings for the first time in an attempt to boost the slowing growth and accelerate the pace of economic transformation.
After helping revive the sovereign wealth funds of the country for almost two decades, oil revenues of the country will start trickling out, denoting a symbolic moment in the country’s shifting focus from its traditional dependency on oil and gas revenues.
According to the estimates of the budget announced on Wednesday, the oil fund of the country will receive nearly NKr204bn from activities in the petroleum industry in the year 2016. However, the government plans to take out nearly NKr207.8bn out of the oil fund, which will dip into the reserved to an estimated NKr3.7bn.
Norway’s finance minister Siv Jensen said that the current budget is the result of a time when the country’s economic outlook is different than what it was accustomed to over the past 10 to 15 years. The decline in oil prices in the global oil market is a reminder of the fact that Norway’s economy is under a restructure.
She added that the government needed to make an increased use of the oil revenues so as to compensate for the lower taxes as the country faces tax cuts worth NKr9.1bn, which also include a reduction in corporate taxes from the current 27 per cent to an estimated 22 per cent by 2018. Income taxes are also estimated to be cut by the country to help citizens survive the economic slowdown.
Oil no longer remains the growth driver for the country’s economy and thus the country faces a need to restructure its economy