The IMF presents views on the Norwegian economy 2014

Today a mission from the International Monetary Fund (IMF) presented its views on the Norwegian economy and Norwegian economic policy. The mission’s report is supportive of the government’s fiscal policy and suggests that changes to the Norwegian tax system could further boost both productivity and economic growth.

The mission concludes that the government’s fiscal policy has been prudent, and that there is ample scope within the fiscal framework to support the growth should the economy soften significantly.

– I have noted the mission’s views, says Finance Minister Siv Jensen. At the same time I am also very concerned with how oil money is put to use. We should use it in a way that helps increase the productivity and growth potential of the economy.

The IMF’s mission team argues that a more neutral tax system can promote efficiency and growth and that a simpler tax system with fewer exemptions and preferences can create fiscal space for a reduction in overall tax rates.

– I agree with this, Ms. Jensen says. But I would like to add that the scope for tax reductions can be increased even further by also keeping expenditure in check.

The team expects growth in the mainland economy of approximately 2 per cent both this year and next year. Oil and gas investment are expected to slow going forward, and new sources of growth are needed.

– The IMF points to an important challenge for the Norwegian economy, says Ms. Jensen. Now is the time to lay the foundation for robust and diverse private sector activity for the coming years.

The IMF’s mission team emphasises the need to strengthen the Norwegian economy’s competitiveness and productivity, pointing to the organisation of local governments, agricultural policy and the selection of public investment projects as areas with potential for improvement.

They support the Norwegian efforts to underpin financial stability, including the tighter capital standards for mortgage lending for both domestic and foreign banks, in line with economic conditions and the regulatory framework in Norway, and the efforts to harmonise prudential standards among Nordic countries.

Over summer, the IMF staff will complete a more extensive report on the Norwegian economy and economic policy that will be presented to the IMF’s Executive Board.

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Read more:

• Concluding Statement of IMF Article IV Mission to Norway
• Webcast from the press conference