New measures to curb the financial impacts of the coronavirus outbreak

Press release | Date: 28/03/2020

| No: 18/2020

Friday 27 March, the Government put forward additional financial measures to address the consequences of the coronavirus outbreak.

‘Norway now has the highest number of persons laid off and unemployed since World War II. The battle to quell the infection is creating major problems for businesses and individuals across the country. The measures we are taking will help people and businesses to get through the crisis,’ said Prime Minister Erna Solberg.

The Government is working in three phases of financial measures related to the coronavirus outbreak. In the first phase, the Government and the Storting introduced targeted measures to quickly meet acute financial challenges: securing income for workers and liquidity for companies to avoid mass dismissals and bankruptcies.

The outbreak of the virus and COVID-19 disease has had a major effect on the Norwegian and international economies. In combination with the fall in oil prices, the outbreak has harmed large parts of the Norwegian business community. Companies and employees alike are having a hard time. The number of laid-off workers has spiked upwards. We are now in the second phase of implementing financial measures related to the coronavirus outbreak.

‘Today we are presenting a new package of measures aimed at companies and people who have lost portions of their income as a result of the virus outbreak and infection control measures. Whole industries, individual companies and small undertakings have been hit hard, and many people fear their life’s work is in danger,’ said Minister of Finance Jan Tore Sanner.

In the past two weeks, 274 000 unemployment benefit applications have been submitted, and the Norwegian Labour and Welfare Administration (NAV) reports that 291 000 people were registered as fully unemployed on 24 March. This corresponds to 10.4 per cent of the labour force. By comparison, two weeks ago the unemployment rate was 2.3 per cent.

‘We have an extraordinary situation in the labour market,’ Minister of Labour and Social Affairs Torbjørn Røe Isaksen said. ‘I want to assure everyone of the basic security of our welfare system. People will receive the support they need while the crisis is ongoing, and we are doing all we can to ensure that the jobs will be there when the crisis is over. In addition, NAV now has the ability to pay unemployment benefits in advance, and we are extending the unemployment benefit period for people who are nearing the time limit. New measures are continually being considered.’

The Ministry of Finance now considers it more likely that the virus outbreak and infection control measures will negatively effect both the Norwegian and international economies for a long time to come, even after Norway’s infection control measures are relaxed.

‘The Norwegian business community is in its toughest battle ever. In recent weeks we have applied a number of immediate measures to improve liquidity in companies, and more has been needed. Now we’re announcing a large-scale scheme for those that have been hit the hardest as well as different sorts of measures aimed at entrepreneurs and growth companies,’ said Minister of Trade and Industry Iselin Nybø.

The Government’s measures amount to a comprehensive effort to limit adverse effects of the virus outbreak and infection control measures on the Norwegian economy. By means of these measures our society as a whole – the state – will bear the bulk of the loss of income the Norwegian economy is now experiencing.

‘Fortunately, the Norwegian economy is fundamentally solid, and we have room to manoeuvre on economic policy, as we are now doing. This is the time for corporate and social responsibility. I want to encourage companies, households, property owners, banks, municipalities, labour and employer organisations – and everyone else who can – to step up and take responsibility so that we can help to preserve jobs for when normal daily life returns,’ the Minister of Finance said.

In the third phase, now before us, the Government will put in place measures to help those who are currently laid off or unemployed to get back to work quickly and help to strengthen Norway’s economic activity.

Key measures in the new Proposition to the Storting:

• Compensation scheme for unavoidable business expenses (new proposal)
  The scheme will provide compensation, for a period, for some of the unavoidable fixed costs of companies severely affected by infection control measures.

• Grants for young growth companies – NOK 2.5 billion (new proposal)
  This includes strengthening the innovation grants scheme by NOK 2 billion and the start-up grants scheme by NOK 500 million.

• Innovation loans – increased loan framework by NOK 1.6 billion, to NOK 3 billion (new proposal)
  Innovation loans may be used for partial financing of investment projects related to start-up, innovation, restructuring, internationalisation and development. The Government proposes that the increased amount should be directed especially towards liquidity loans.

• Interest payment support fund – NOK 300 million (new proposal)
  The purpose is to provide payment relief to companies hit by the crisis, through instalment deferral and deferral of interest payments on existing or new innovation loans and venture loans with a regional focus.

• Grants for private innovation groups – NOK 50 million (new proposal)
  This support scheme is to help these groups to maintain the services they provide to start-up and growth companies.

• Business-oriented research – NOK 250 million (new proposal)
  This increase will help to keep R&D activity up across the entire business sector, so that research projects and activities do not cease.

• Capital for fund and matching investments – NOK 1 billion (new proposal)
  The Government proposes to increase Investinor’s investment capital to improve access to capital for early-stage companies.

• Extended unemployment benefit period for persons dismissed from work (new proposal)
  Unemployed and laid-off workers who are approaching the maximum period for unemployment benefits will have their benefit period extended through to the end of June. The change will apply to both the ordinary unemployment benefit period specified in section 4-15 of the National Insurance Act and the special benefit period specified in section 4-19 for persons who have performed military service or compulsory civil defence service. Because of the extension in the rules for job seekers and laid-off workers, changes are also being made for people who receive a work assessment allowance (AAP) while looking for work.

• Extended unemployment benefit period for laid-off workers (new proposal)
  For laid-off workers there will be a similar extension of the unemployment benefit period as a result of temporary regulations issued by the Ministry of Labour and Social Affairs to extend the period employers are released from payroll obligations for those who were laid off prior to 1 March 2020. This means the state is to pay unemployment benefits for laid-off workers beyond the current 26-week period. As now planned, this is to apply through the end of June.

• Advance payment of unemployment benefits (new proposal)
  The Government is enabling NAV to pay unemployment benefits in advance. Thus, those who have lost their income will be able to get money into their account quickly, without having to wait for processing of the unemployment benefit application. This policy applies to employees entitled to benefits in the event of unemployment or layoff.

• Shorter employer period for sickness benefits (announced, adopted 27 March)
  Employers are to be reimbursed for sickness benefits paid from the fourth day onwards for sickness absence related to the coronavirus.

• Easier to report sickness without physician’s certificate (announced, adopted 27 March)
  Employees are given the right to self-report sickness for 16 days even though the employer only pays from Day 4.

• Sickness benefits for self-employed persons (announced, adopted 27 March)
  Self-employed persons may also receive sickness benefits from the National Insurance Scheme from the fourth day onwards for sickness absence due to the coronavirus. Sickness absence for the first 16 days may be certified by electronic report to NAV by the self-employed person.

• Freelancer sickness benefits (announced, adopted 27 March)
  Freelancers may also receive sickness benefits from the National Insurance Scheme from the fourth day onwards for sickness absence due to the coronavirus. Sickness absence for the first 16 days may be certified by electronic report to NAV by the freelancer.

• Assessment of need for extension of maximum period rules for various benefits (announced), i.e. extension beyond what is all already regulated for the work assessment allowance (AAP) in section 5-1 of the Regulations)
• Lowering of value added tax reduced rate (new proposal)
  The reduced-rate value added tax (VAT) is further reduced from 8 per cent to 7 per cent from 1 April 2020 to 31 October 2020 for industries including tourism and certain sporting activities. These industries generally have a VAT rate of 12 per cent.

• Reduced employer contribution (announced, followed up in Revised National Budget)
  The employer’s social insurance contribution is to be reduced by 4 percentage points for one term, equivalent to two months. This proposal will be submitted in the revised budget. For zone V (the former Finnmark county and region of Nord-Troms), where the rate is zero, compensation of NOK 250 million is to be provided.

• Postponed advance tax payment for personal taxpayers (implemented and new proposal)
  The first instalment due date for advance tax payment is postponed for personal taxpayers from 15 March to 1 May 2020. The second instalment due date for advance tax payment is postponed for personal taxpayers from 15 May to 15 July.

• Postponed deadline for advance tax payment for non-personal taxpayers (companies) (adopted, to be amended 27 March)
  The second instalment due date for non-personal taxpayers (companies, etc.) has been postponed from 15 April to 1 September 2020. However, electric power enterprises will not be able to postpone advance tax payment on ordinary income.

• Loan guarantee scheme for small and medium-sized companies (announced 17 March, adopted 27 March)
  As previously announced, the government has been working on a loan guarantee scheme for small and medium-sized businesses. A central government guarantee of loans issued by the banks makes it easier for businesses to obtain money and get through this crisis. The scheme is approved by the EFTA Surveillance Authority (ESA). The banks can now employ it. The Government is continuing work to expand the number of companies eligible for loans under the scheme. Such expansion will be stipulated in regulations and must also be approved by the ESA before implementation. The Government is working to have this in place next week.

• Government Bond Fund to help large enterprises (announced 17 March, adopted 27 March)
  Folketrygdfondet today was granted its mandate for the Government Bond Fund and can now lend money to companies by buying interest-bearing securities. The fund is modelled on a fund established during the financial crisis, but is tailored to the challenges we now face. Previous experience has shown that this measure can contribute to a more efficient corporate bond market.

• Facilitate socially beneficial acquisitions and restructurings of listed companies (new legal basis)
  Under current regulations, shareholders may have to pay a price which, in the present situation, is artificially high in the event of a change of control in listed companies. Today, a legal basis has been established so regulations can be issued allowing capital to be raised for listed companies without the offer price for mandatory tenders being based on prices that do not reflect the current situation.