Historical archive

The National Budget 2022:

A budget to promote growth, sustainability, and inclusiveness

Historical archive

Published under: Solberg's Government

Publisher Ministry of Finance

The economic crisis is over. The 2022 budget proposes measures to safeguard sustainable growth. We normalise fiscal policy and the withdrawal from the Government Pension Fund Global (GPFG), support those affected by the crisis and facilitate job creation, enable green transition, and improve skill prospects.

– Through cooperation, we have handled the steepest economic downturn since WWII. In 2022, economic activity will be above trend, job opportunities will be ample, and over 90 percent of the adult population have been vaccinated. The health sector must remain at high alert, but with our joint effort, we will make the pandemic history, says Minister of Finance Jan Tore Sanner (Conservative party).

We estimate economic growth will be above normal also in 2023 and 2024.

Employment among residents has not been higher since 2012, whereas short-term immigration is substantially lower than before the pandemic. In several industries, businesses have difficulties with finding qualified labour.

– In the last months, entry of new businesses is record high. Lack of skilled labour must not become a bottleneck for further growth. We will continue our commitment towards strengthening education and enhancing competence. We will use the positive momentum from the crisis and speed up developments towards a greener, more digital society, says Minister Sanner.

With the proposed budget, the structural non-oil fiscal deficit is estimated at NOK 322.4 billion in 2022, equalling 2.6 percent of the expected capital of the GPFG at the beginning of the year, down from 3.6 percent this year. 

– We will bring the structural non-oil deficit down well below the 3 per cent estimated real return on the GPFG. The budget is well adapted to the current cyclical position of the Norwegian economy and makes us more robust to future shocks, says Minister Sanner.

The structural non-oil fiscal deficit is reduced by 2.6 percent of GDP (the fiscal impulse), mainly due to the termination of the extraordinary and temporary COVID-19 economic policy measures.

Even if the Norwegian economy at large has weathered the crisis, some groups were severely hit and will need assistance also in 2022. The government emphasizes measures that build competence, create opportunities and improve labour market inclusion.

– This crisis hit some groups disproportionally. Our ambition is that, unlike after previous downturns, this crisis will not leave people permanently outside the labour market, says Minister Sanner.

These are the most important strategies:

In the 2022 National Budget the Government will prioritize measures that:

  • Facilitate private sector job creation
  • Support those who remain heavily affected by the corona crisis.
  • Promote efforts to strengthen skills that match the demands of businesses
  • Speed up green transition and digitalisation
  • Enable safe and good living conditions throughout the country
  • Strengthen pandemic preparedness, by securing access to vaccines, protective equipment, and medical supplies.

Norway countered the corona crisis with forceful measures to safeguard employees and businesses, but also with innovation and adaptability. We have also taken significant steps towards a greener and more digitalized society.

Table 1: Key figures for the Norwegian economy. Percentage volume change from previous year, unless otherwise stated

 

NOK billion1

 

 

 

 

2020

2020

2021

2022

Private consumption

1 496,4 -6,9 4,0 11,1

Public consumption

905,6 1,7 3,9 -0,2

Gross fixed investments

907,0 -3,8 0,9 -0,4

Of which:  Petroleum extraction and pipeline transportation

180,8 -4,1 1,0 -14,4

     Businesses in mainland Norway

313,6 -6,1 0,9 4,4

      Housing

190,7 -4,0 4,2 4,1

     Public sector

216,4 -1,0 -2,5 -0,2

Mainland Norway demand2

3 122,7 -3,9 3,4 6,0

Exports

1 110,0 -0,5 5,2 7,1

    Of which:  Crude oil and natural gas

353,0 10,1 3,5 4,8

    Goods and services, except oil and gas

637,0 -8,2 6,4 9,9

Imports

1 125,3 -11,9 3,7 10,6

Gross domestic product

3 413,5 -0,8 3,8 4,0

Of which: Mainland Norway

3 043,0 -2,5 3,9 3,8

Other key figures:

       

Employment, persons

  -1,3 0,8

1,4

Unemployment rate, LFS (level) 3

  4,6 4,7 4,1

Unemployment rate, registered (level)

  5,0 3,2 2,4

Annual wage growth

  3,1 2,8 3,0

Consumer price inflation (CPI)

  1,3 2,8 1,3

Underlying inflation (CPI-ATE)

  3,0 1,8 1,6

Crude oil prices, NOK per barrel (current prices)

  407 568 559

Crude oil prices, USD per barrel (current prices)

  43 68 67

Three-month money market rate, pct.4

  0,7 0,5 1,1

Import-weighted exchange rate (I-44), annual changes in pct 5

  6,3 -6,4 -0,3

GDP growth on the part of Norway’s trading partners 6

  -4,3 5,0 4,1

1 Provisional national account figures in current prices.

Excluding inventory changes.

3An alternation in the Labour force survey from January 1 2021 may lead to a break

Technically calculated using forward prices in March.

5 Positive number indicates Norwegian krone depreciation.

6 Norway’s 25 most important trading partners weighted by their respective shares of Norwegian goods exports, except oil and gas.

Sources: Statistics Norway, ICE, Norges Bank, Norwegian Labour and Welfare Administration, Reuters, Macrobond and the Ministry of Finance.

Table 2 Key figures for the fiscal budget and the Government Pension Fund. NOK billion

 

2020

2021

2022

Total revenues

1 288,8 1 366,3 1 553,3

1 Revenues from petroleum activities

134,4 210,1 303,6

    1.1 Taxes and duties

35,4 58,9 167,9

    1.2 Other petroleum revenues

99,0 151,2 135,7

2 Non-petroleum revenues

1 154,4 1 156,2 1 249,7

     2.1 Mainland Norway taxes

1 054,2 1 074,7 1 165,8

     2.2 Other revenues

100,2 81,4 83,9

Total expenditure

1 552,5 1 595,0 1 576,5

1 Expenditure on petroleum activities

27,6 26,0 26,5

2 Non-petroleum expenditure

1 524,9 1 569,0 1 550,0

Fiscal budget surplus before transfers to the Government Pension Fund Global

-263,7

-228,7 -23,2

- Net cash flow from petroleum revenues

106,8 184,1 277,1

= Oljekorrigert overskudd

-370,5 -412,8 -300,3

+ Overført fra Statens pensjonsfond utland

417,4 412,8 300,3

= Non-oil fiscal surplus

46,9 0,0 0,0

+ Net transfer to the Government Pension Fund Global

-310,6 -228,7 -23,2

+ Interest and dividends, etc., on the Government Pension Fund1

224,5 205,4 233,8

= Fiscal budget and Government Pension Fund consolidated surplus1

-39,2 -23,3 210,6

Memo:

     

Market value of the Government Pension Fund Global2

10 086 10 907 12 250

Market value of the Government Pension Fund2

10 355 11 199 12 552

National insurance retirement pension liabilities2,3

8 941 9 201 9 634

Structural non-oil fiscal deficit, NOK billion

364,9 397,2 322,4

    Percentage of the fund capital

3,6 3,6 2,6

    Percentage of mainland Norway trend GDP

11,5 12,1 9,5

Budget indicator, percentage points4

3,8 0,6 -2,6

Real underlying expenditure growth, pct.

8,8 1,0 -3,4

1 Not including securities gains or losses.

2 At the beginning of the year.

3 Net present value of already accrued rights to future retirement pension payments under the national insurance scheme.

4 Positive numbers indicate an expansionary fiscal stance. The indicator does not take into consideration that different revenues and expenditure items may differ in their impact on economic activity.

Sources: Ministry of Finance and Statistics Norway.