Oil-Rich Norway to Increase Spending on Drilling

Brian Hicks

Written By Brian Hicks

Posted October 9, 2012

Norway’s budget draft reveals government plans of increasing oil revenue spending in 2013 and doubling carbon taxes, while also raising funds to help developing countries protect tropical forests.

Thanks to high oil prices and low interest rates, Norway’s had an economic boom recently. It is the world’s eighth-largest oil exporter and one of the top economic performers in the Eurozone with no national debt.

New oil discoveries along the nation’s expansive coastline promise more bounty to come. The country’s oil riches permit it to have structural budget deficits while still only using part of its oil revenue for budget.

Bloomberg reports:

“Despite the challenging global economic environment, the Norwegian economy continues to perform well, and capacity utilization is now higher than foreseen at the presentation of the Revised National Budget last May,” said Finance Minister Sigbjoern Johnsen.

Economists had anticipated announcements of higher spending plans by the Labor-led government.

The Norwegian crown held stable against the euro on Monday, at 7.40 crowns. The central bank continues to hold interest rates at 1.5 percent with no change expected until late 2012.

Forecast for 2012 mainland GDP was raised to 3.7 percent from an earlier May forecast of 2.7 percent, and next year’s growth rate is expected to be 2.9 percent. In the second quarter, Norway’s economy expanded an annualized 5 percent, which marks the fastest growth in all of Europe.

According to the draft budget, 2013 will see a raise in the carbon tax of 200 crowns ($35.3) per ton for the offshore petroleum industry. A separate tax of 50 crowns per ton will be levied on emissions from the fishing industry.

The government also expects to maintain a 10 billion-crown fund to promote green initiatives, while helping developing nations shape their own green policies. Under a U.N. plan to slow worldwide deforestation projects, Norway has been the most proactive and generous developed nation.

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