Officials at Norway’s Ministry of Finance are having to rewrite much of the country’s Budget for 2023 after admitting they under-estimated inflation and expected stronger economic growth.
Minister for Finance, Trygve Slagsvold Vedum said he and his top officials overlooked leading economists’ predictions on how high prices would rise this year.
Mr Vedum (pictured) said the Government would now have to withdraw more money from the State’s Oil Fund in order to balance the Budget.
Political commentators are now warning that “Vedum’s mistakes” would have consequences.
They said the Minister did not believe prices would rise more than 2.8 per cent this year, even though both Norway’s Central Bank and the State Statistics Bureau (SSB) were already predicting 4.5 per cent and 3.5 per cent respectively when Mr Vedum first presented the Government’s Budget last October.
Since then the Central Bank has further raised its prognosis for Norway’s Consumer Price Index to 4.8 percent, and SSB has boosted its own estimate to 4.9 per cent.
The Government initially wanted to withdraw less money from the Oil Fund (Norway’s huge sovereign wealth fund meant to save oil revenues for future generations) to balance its Budget.
Mr Vedum (pictured), and Prime Minister, Jonas Gahr Støre boosted taxes and wanted to cut spending, but with inflation currently at nearly six per cent, prices are spiking for the Government as much as they have for consumers.
That would force hospitals, schools, police and all public services to make even more drastic cuts than initially expected, at a time when politicians’ priorities are already hotly contested.
Oslo, 18 February, 2023
