May 15, 2020 / 12:40 PM / 20 days ago

UPDATE 1-Norway's level of public spending not sustainable over time -fin min

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OSLO, May 15 (Reuters) - Norway will gradually turn to stimulating economic activity rather than continuing to pay firms to dampen business, with the current level of public spending not sustainable over time, Finance Minister Jan Tore Sanner said on Friday.

“Public spending is at record highs, and while I understand those who would like to see even more, we must ensure that the money is spent in a targeted way,” Sanner said in a question-and-answer session with a small-business industry group.

Norway’s centre-right government on March 12 announced a partial lockdown of society, forcing many businesses to close and causing a fivefold spike in unemployment in the weeks that followed.

It has since begun a gradual reopening, and Sanner on Tuesday presented a revised 2020 fiscal budget with record spending from Norway’s sovereign wealth fund, exceeding a self-imposed cap for the first time since 2009.

Most of the expenses stemmed from previously announced initiatives however, such as boosting unemployment benefits and covering parts of companies’ costs, and later this month the government will present a longer-term roadmap to recovery.

“As a Conservative I do believe in the market ... We must gradually enter a new phase where we go from compensation to stimulation of activity,” Sanner said.

“Compensations must be limited to a certain period. We can’t get used to the kind of spending we have at the moment.” (Reporting by Terje Solsvik, editing by Gwladys Fouche)

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