Last year, public finances ran a deficit for the first time since 1993. This is the price of the coronavirus epidemic, says section head Pål Sletten at the Statistics Norway.
Last year, the general government deficit was NOK 112 billion, or NOK 349 billion less than the year before.
According to the Norwegian Statistical Office, 2020 is therefore the first year since 1993 in which public income is lower than expenditure.
– public finances had a deficit in 2020, for the first time since 1993 the state bears a significant share of the decline in national income, the private sector, says the head of the national accounts section in Norway statistics, PAL Sletten
- Reward for the economy in a pandemic
Last year, the coronavirus crisis decreased Norway's gross national income by 111 billion Norwegian kroner, or three percent.
According to the Norwegian Statistical Office, this is due to a decline in Norway's domestic production income, a decline in activity in mainland Norway, and lower prices for oil and gas supplies from the Norwegian shelf.
- Gross national income fell sharply in 2020 by three percent. But when you look at actual disposable income, which is how much money we have to spend, it has dropped much more. Now we are back to the level of the beginning of the XNUMXst century. We've gotten poorer, says Sletten.
- Since the second quarter of last year, the economic situation has deteriorated, but at the end of the year it gained momentum. In a way, this is a shock that we left behind. That way, we can not worry about such numbers. He says this is the price of the epidemic.
He points out that the central government deficit may not look too bad in retrospect as part of the central government's oil tax revenues has been deferred. Only as a result of the crisis package adopted by the Storting last year.
- Part of the weakening in 2020 is due to changes in tax revenues. Public finances will pay back some of this in a few years, says Sletten.
Record savings
The Norwegian Central Statistical Office points out that many Norwegians lost their jobs or were made redundant last year after many companies struggled after the crisis. Overall, however, household incomes rose and savings were unusually high.
The agency said the savings rate hit a historically high 15,4 percent last year. This means that households saved NOK 257 billion, twice as much as the year before. One of the reasons was the reduction in consumption.
The state paid large sums of compensation to companies and increased social security. Sletten points out that the fact that the state took over the majority losses as a result pandemic, contributed to a major shift between the public and private sectors.
- The effect is that the state has a large deficit and private individuals gain. So what is the private sector doing with this money? It was not easy to spend them, only saving was left. This led to a large increase in the savings rate. It could also mean that we will see an increase in consumption in the next phase, says Sletten.
However, if you count the country as a whole, savings fell by 101 billion kronor last year as the public sector saved less. Norway's total saving is defined as disposable income less private and public consumption.
Oil fund growth is not included
National income does not include changes in the value of Norway's oil resources and money saved in the Oil Fund.
- What we're talking about are income streams. However, the revaluation of the Petroleum Fund is not taken into account, as it is not a real profit. He says it's important when we say that the state was responsible for most of the losses.
According to the Norwegian Statistical Office, the state's capital gains in the Petroleum Fund accounted for almost 30% of the total value generated in the entire economy last year.
The Oil Fund achieved a return of over NOK 1000 billion in both 2019 and 2020 year.
