Government deficit continues
The general government accounts recorded a deficit for the third consecutive quarter in 2020Q4. The accumulated deficit in 2020 is estimated at NOK 115 billion.
Updated figures from General government revenue and expenditure show a 10 per cent decrease in accumulated revenue and an increase of 8 per cent in accumulated expenditure from 2019 to 2020. The net effect of changes in revenue and expenditure is expressed as net lending/borrowing, or simply the deficit, in the government accounts.
The updated figures include revisions in 2019 and 2020. One of the most significant changes is a revision of capital transfers in 2020, which is based on new information about petroleum taxes.
Support for households and businesses
The government has implemented an array of measures to counter the effects of the economic shutdown on households and businesses in the wake of the COVID-19 outbreak.
Guarantee schemes have been introduced to airlines and small and medium-sized enterprises to ease access to liquidity. The projected losses from these schemes are recorded as capital transfers to business.
Social benefits payments have risen sharply, primarily as a result of increased unemployment benefits. After spiking in 2020Q2, unemployment benefits have come down slightly, although they still remain high in 2020Q4.
Significant revenue reduction
The reduction in total revenue can largely be ascribed to diminished tax receipts from the petroleum sector. Tax revenue from the petroleum sector has been doubly affected in 2020 by lower oil prices and provisional amendments made to taxation of oil and gas (see box below). The tax relief program reduces petroleum taxes on the revenue account and furthermore increases capital transfers on the expenditure account, thereby reinforcing the net effect on the government books, all else equal.
Dividends from the State’s Direct Financial Interest and the Government Pension Fund Global are diminished. Additionally, reduced receipts from fees and excises, and slowed economic activity overall have contributed to reduced government revenue collected from mainland Norway.