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挪威: Norway Finance Profile 2012

2012/03/22

Fiscal policy

Fiscal policy should be geared toward meeting the 4 % deficit target over the cycle. Adherence to the fiscal guidelines will help ensure that significant oil revenue is saved to address Norway’s long-run fiscal challenges (see below). Fiscal discipline is also crucial to secure balanced, broad-based growth and contain risks of excessive exchange rate appreciation. In this context, the slight tightening of the fiscal stance in the 2011 budget is appropriate. Assuming the recovery continues apace, the structural nonoil deficit should be reduced moderately below the 4 % target over the medium term in order to offset the stimulative stance taken during the recession, thereby ensuring the target is met on average over the cycle.

Continued structural reforms are also necessary to address long-run fiscal challenges. Population ageing and falling oil revenue will give rise to large fiscal deficits in the long run under unchanged tax and expenditure policies. This puts a premium on timely structural reforms to boost labor supply and curb the growth of entitlement spending, while maintaining a strong safety net for those in need. We therefore welcome recent reforms of National Insurance Scheme old-age pensions to encourage longer working lives, tie benefits to longevity trends, and adjust indexation rules. However, to ensure the effectiveness of these reforms, it will be critical to make corresponding adjustments to the rules governing other benefit schemes, notably disability pensions. Otherwise, increased use of these schemes might undermine the gains from the reform of old-age pensions. More generally, further efforts are necessary to reduce the persistently high enrollment rates for sick leave and disability benefits. Such efforts could include improved incentives for employers and employees, greater use of partial and temporary benefit awards, and increased reliance on social security physicians in assessing eligibility.

Monetary and financial sector policies

With inflation projected to return only gradually to the target, the current accommodative monetary stance is appropriate. Although a prolonged period of low interest rates could heighten financial vulnerabilities—notably by inducing further house price appreciation and household borrowing—this concern is best addressed by prudential measures, as these can be targeted to the sectors most at risk. Indeed, the combination of low policy rates and sufficiently tight and targeted prudential policies appears most likely at the current juncture to achieve sustainable growth along with price and financial stability. In particular, low interest rates provide income relief to indebted sectors—helping to repair their balance sheets—while strong prudential standards avert a re-accumulation of excessive debt.

Against this backdrop, financial sector policies should support a gradual reduction in vulnerabilities. Specifically:

We welcome the guidelines issued by the Financial Supervisory Authority (FSA) earlier this year to tighten credit standards for mortgage lending, given risks in the housing sector. Looking ahead, it will be important to carefully evaluate the effectiveness of this measure and further adjust prudential standards as necessary.
In the same vein, the FSA should maintain pressure on financial institutions to bolster capital—including by restraining dividend payouts—and improve liability structures, with reduced reliance on short-term wholesale funding. Further progress in strengthening balance sheets will prepare banks for tighter regulatory requirements in the future, while building extra buffers to deal with financial stability risks.
These efforts should be supported by a gradual reduction of the very large tax subsidy for housing (offset by tax reductions elsewhere), as the subsidy promotes overinvestment and high mortgage debt while disproportionately benefiting higher-income households.

Looking beyond near-term measures, there may be a case for adopting a more formal framework for countercyclical macroprudential policy. The key objective is to mitigate the amplitude of the credit cycle by using targeted instruments, such as time-varying capital risk weights, loan-to-income caps, or collateral requirements. In designing a macroprudential framework, it would be important to set out clear institutional responsibilities based on relevant expertise and in a way that ensures accountability and appropriate operational independence. Furthermore, cooperation with and support from foreign regulators, notably in the Nordic region, would be critical to ensure the effectiveness of some measures.

The outlook for the Norwegian economy has worsened, the prime minister and central bank governor said on Tuesday as the International Monetary Fund cut its forecast and said the euro zone crisis could hurt exports.

The government of the oil-rich Nordic country had expected the economy, excluding activity from the oil and shipping sectors, to grow 3.1 percent in 2012, up from a forecast 2.8 percent growth in 2011.

"The government will cut the 2012 growth forecast for the Norwegian economy," Prime Minister Jens Stoltenberg told reporters on Tuesday, after meeting with business and trade union leaders to discuss the European debt crisis and its impact on Norway.

Stoltenberg did not say how much lower economic growth was projected to be, nor did he say why the government was cutting its forecasts. The new forecast, he said, would be presented in a forthcoming revised budget.

The Nordic nation of 4.9 million inhabitants is not a member of the European Union, but its export-oriented industries are highly dependent on European demand.

It survived the 2008 financial crisis relatively unscathed due to its booming oil sector and a cushy budget surplus fuelled by its half-trillion-dollar sovereign wealth fund but there have been signs that the latest global economic turmoil are hurting Norway.

OUTLOOK HAS SLIGHTLY DETERIORATED

The head of the central bank said Norway's growth outlook had deteriorated since its last assessment in October, but that the changes had been slight and that it was too early to revise official projections.

Oeystein Olsen added that both positive and negative events have impacted the global climate since October and more data would be required before the bank made its next interest rate decision Dec. 14.

"I would resist any attempt to summarise the picture as a basis for future interest rates," Olsen said on the sideline of a conference.

"To summarise, on an ad hoc basis, the information we have received since Oct. 19 has been slightly more negative than our projections."

The bank's key policy rate is 2.25 percent, and it has said last month it could stay there "for a long while". In a newspaper commentary on Monday, Olsen said the bank was prepared to cut rates if funding for Norwegian banks were to dry up.

He said on Tuesday the European agreement to help Greece shoulder its debt load was "positive," but said Europe's EFSF bailout fund needed more firepower to stop the crisis spreading to Italy.

EURO-ZONE CRISIS TAKES TOLL

Earlier on Tuesday, the IMF said it saw growth of 2.5 percent in Norway's economy both this year and next. It said last year the Norwegian economy would grow between 2.5 percent to 3 percent in 2011.

The Washington-based lender did not provide a reason for the lower forecast but said Norway could suffer from turmoil in the euro zone.

"Severe (eurozone) stress would undoubtedly affect Norway via shaken consumer confidence, lower exports to Europe, lower oil prices, and strains in international interbank markets-a key funding source for Norway's largest banks," it said in a statement.

The IMF also said Norway was at risk of a house price bubble due to rising prices and high-level of household debt.

Norway's economy excluding its flagship oil sector slowed in the third quarter, the latest figures by the country's statistics office showed on Tuesday. ($1 = 5.8199 Norwegian crowns) (Additional reporting by Camilla Knudsen in Oslo and Balasz Koranyi in Jevnaker; Writing by Gwladys Fouche; Editing by Anna Willard)