Norway is relying on its $1.3 trillion sovereign wealth fund more than ever, as the country ratchets up spending without turning to bond markets to provide economic relief from the pandemic.
The government of Prime Minister Erna Solberg, facing an election in September, is raising this year’s so-called structural non-oil fiscal deficit by more than 9 per cent to 403 billion krone, or almost $50bn, it said on Tuesday. Government withdrawals, as a share of the world’s biggest wealth fund, will reach 3.7 per cent, compared with the central bank’s estimate of 3.3 per cent.
“Fundamentally, it shows that the government sees a bigger need for fiscal support throughout this year,” Handelsbanken analyst Marius Gonsholt Hov said in a client note.
The wealth fund, built on Norway’s North Sea oil revenue, has shielded the richest Nordic economy from the worst of the pandemic. The intensity of government withdrawals from the fund forced the giant investor to start liquidating assets last year, marking an historic moment for Norway. Since then, the fund has generated near-record returns as markets rebounded.
“Norway’s fiscal superpower has enabled swift and ample support during the pandemic, lessening the economic hit from the virus. The challenge now is to tailor the measures so that the economy gets back to work,” said Bloomberg's Nordic economist Johanna Jeansson.
Mainland GDP, which adjusts for Norway’s oil and offshore industry, is expected to grow 3.7 per cent this year after a 2.5 per cent contraction in 2020, the finance ministry said.
The measures announced on Tuesday “add to an already expansionary budget”, it said. “This will pave the way for new growth, a green shift, and activity and employment throughout the country.”
Kyrre Aamdal, a senior economist at DNB Markets, says the government’s decision to boost spending this year may in part have been motivated by the upcoming parliamentary elections. He also said that a wider deficit is likely to result in more krone purchases, as Norges Bank converts offshore revenue and transfers from the fund into the domestic currency to pad government coffers.
Ms Solberg’s Conservatives are polling neck-and-neck with the opposition Labour Party. But she faces a weakened parliamentary support base, as junior partners sink to about 4 per cent. That may be enough to put an end to eight years of centre-right government in Norway.
With fiscal policy carrying the main burden in Norway’s adjustment to the pandemic, its central bank is now pegged to be the first in the developed world to start a cycle of interest rate increases as soon as in September.
Norway’s fiscal spending plan “has hawkish implications for Norges Bank”, Lina Fransson, a fixed income strategist with SEB, said in a research note. “We stick to our forecast that Norges Bank will wait until December before the first rate hike as we expect some uncertainty to remain in September, but the revised forecast in June will of course be very interesting.”
Meanwhile, vaccination efforts in the country have been disrupted by a decision to shelve AstraZeneca from Norway’s immunisation programme. A government-appointed expert group has also advised against the use of Johnson & Johnson’s vaccine amid concerns over blood clots.
The finance ministry says there remains “significant” uncertainty over how the pandemic will continue to affect society and warned the recovery may be delayed by new virus variants, challenges with vaccine deliveries and new infection waves outside Norway.
According to analysts at Nordea, Norway will have enough vaccines to ensure that all adults will have had at least one shot by the end of July.
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Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
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The specs
Common to all models unless otherwise stated
Engine: 4-cylinder 2-litre T-GDi
0-100kph: 5.3 seconds (Elantra); 5.5 seconds (Kona); 6.1 seconds (Veloster)
Power: 276hp
Torque: 392Nm
Transmission: 6-Speed Manual/ 8-Speed Dual Clutch FWD
Price: TBC
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
SPEC%20SHEET%3A%20SAMSUNG%20GALAXY%20Z%20FOLD%204
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UAE currency: the story behind the money in your pockets
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
UAE currency: the story behind the money in your pockets
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
COMPANY%20PROFILE%20
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The Bio
Favourite holiday destination: Either Kazakhstan or Montenegro. I’ve been involved in events in both countries and they are just stunning.
Favourite book: I am a huge of Robin Cook’s medical thrillers, which I suppose is quite apt right now. My mother introduced me to them back home in New Zealand.
Favourite film or television programme: Forrest Gump is my favourite film, that’s never been up for debate. I love watching repeats of Mash as well.
Inspiration: My late father moulded me into the man I am today. I would also say disappointment and sadness are great motivators. There are times when events have brought me to my knees but it has also made me determined not to let them get the better of me.
GIANT REVIEW
Starring: Amir El-Masry, Pierce Brosnan
Director: Athale
Rating: 4/5
Globalization and its Discontents Revisited
Joseph E. Stiglitz
W. W. Norton & Company
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Zayed Sustainability Prize
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
JOKE'S%20ON%20YOU
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Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
How Filipinos in the UAE invest
A recent survey of 10,000 Filipino expatriates in the UAE found that 82 per cent have plans to invest, primarily in property. This is significantly higher than the 2014 poll showing only two out of 10 Filipinos planned to invest.
Fifty-five percent said they plan to invest in property, according to the poll conducted by the New Perspective Media Group, organiser of the Philippine Property and Investment Exhibition. Acquiring a franchised business or starting up a small business was preferred by 25 per cent and 15 per cent said they will invest in mutual funds. The rest said they are keen to invest in insurance (3 per cent) and gold (2 per cent).
Of the 5,500 respondents who preferred property as their primary investment, 54 per cent said they plan to make the purchase within the next year. Manila was the top location, preferred by 53 per cent.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
