Susanne Munch Thore
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In line with a number of other European countries, the Norwegian government has adopted the most far-reaching restrictions in society in peacetime to combat mass infections as a result of the corona virus. Here is what you need to know about the measures adopted to curb the financial implications. We have also included an overview of the current restrictions.
Published the 2nd of April 2020
Due to the overall restrictions (see below), virtually all Norwegian businesses are affected by the current outbreak of corona virus. Despite a strong underlying economy with a pre-corona unemployment rate of less than 4%, mass-layoffs have already been conducted and bankruptcies are looming. The Norwegian stock market has plunged in line with world markets, affecting businesses and investors. The Norwegian government has offered three crisis packages on 16, 19 and 31 March, respectively, as well as introducing certain other means of support.
The government has announced that it will establish a cash contribution scheme to aid businesses with their unavoidable, fixed costs. The government has indicated that the total contributions will amount to NOK 20 billion (approx. EUR 2 billion) per month, and will be granted up to and including the month of May. The government has informed that the scheme will cover a broad range of businesses, will be easy to apply and in line with the regulations on state subsidies.
Businesses in growth will receive contributions amounting to a total of NOK 2.5 billion (approx. EUR 0.25 billion). Further, various measures and schemes to grant certain businesses contributions and/or postponements in the payment of interest and repayments have been introduced. Compensation regimes amounting to MNOK 300 and MNOK 600 will also be established to alleviate the cultural scene, and sports- and voluntary organizations, respectively.
The Norwegian Ministry of Finance has reduced the Norwegian countercyclical capital buffer for banks from 2.5% to 1%, enabling banks to increase their commitments. Norwegian banks are solid and profitable and have sufficient capital to absorb losses in a downturn. They have been subject to stricter capital buffers than most other European countries. Further, Norges Bank has reduced the policy rate to 0.25% and has decided to offer extraordinary three-month F-loans to banks for as long as this is deemed necessary.
In addition, a framework for governmental guarantees for loans to small and medium sized businesses has been established, whereby the government guarantees for 90% of the amount in new loans amounting to up to MNOK 50 per business. Further, a governmental bond fund for larger businesses has been re-established. The fund will provide loans amounting to a total of up to NOK 50 billion (approx. EUR 5 billion).
The government has also established guarantees amounting to NOK 6 billion (approximately EUR 0.6 billion) to the benefit of airline companies, whereby the government will provide 90% of the amount and the airline companies will have to contribute the remaining 10% through obtaining loans from a bank or other financial institution. Airlines operating air routes as public services will also be compensated with approx. MNOK 40 per month.
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The crisis packages include inter alia various temporary tax and VAT postponement and reductions, an opportunity for lossmaking companies to reallocate loss towards previous years’ taxed surplus and suspension on air passenger tax and aviation charges.
Business operating in inter alia the travel, hotel and parts of the cultural industry will receive a VAT reduction from 12% (pre-corona) to 6%. Further, the employers' national insurance contributions will be lowered with 4% for two months.
Employees who are subject to temporary lay-offs are secured full compensation up to a certain level (approx. NOK 600,000) for 20 days and thereafter 80% salary, payable by the employer for the first two days and by the government from day 3.
Special rules are in place for self-employed, securing a temporary compensation of 80% of the average of the last 3 years from day 17 of the income loss. The government has also established a temporary regime consisting of partly a loan and partly a scholarship, to alleviate students experiencing income loss due to the corona virus outbreak.
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The Financial Supervisory Authority of Norway has urged banks and Norwegian bank holding companies to conduct a renewed assessment of the distribution of 2019 proceeds in light of the ongoing crisis and financial uncertainty.
The government has also adopted a new and temporary "Corona Act", which authorizes the government to implement temporary regulations as required to combat COVID-19 with simplified constitutional procedures. The Act and the regulations are only valid until 27 April 2020. However, the government has on 1 April proposed to prolong the duration of the Act to 27 May. The government will on 8 April consider whether a number of restrictions such as closure of schools and certain businesses (see below) shall be prolonged after 14 April.
The temporary regulations include inter alia a set of new rules which imply that companies may conduct their board and general meetings without a physical meeting (i.e. through telephone, electronically or by other satisfactory means).
The government has stressed that further measures are not excluded, and the adopted measures are still work in progress.
For reference on the Government’s measures to avoid layoffs and bankruptcies in viable companies, please see https://www.regjeringen.no/no/aktuelt/the-government-acts-to-mitigate-effects-of-the-covid-19-pandemic-on-the-economy/id2693471/
The following travel restrictions apply:
Non-Norwegians (except EEA citizens and their families working or living in Norway) will as of 16 March 2020, not be permitted to enter the country. Norwegians returning home from abroad shall be admitted and key airports are kept open. Passport control applies for all persons entering the country, also from within the Schengen area.
The authorities have recommended postponement of all travels (including domestic travels) up to 14 April which are not strictly necessary. Upon return to Norway from travel abroad, a 14 day quarantine period will apply. Special restrictions apply to health workers.
The vast majority of governmental employees have been instructed to work from home (except for health workers etc.), and home-office solutions are in general encouraged and must be considered. The government has also prohibited all Norwegian inhabitants from staying in vacation homes outside of their own commune, in order to alleviate pressure on local health facilities.
Gatherings: A restriction on maximum 50 persons applies, and such meetings shall only be held subject to strict requirements in order to control the risk of infections. In practice, all conferences and large meetings have been cancelled unless they can be held by electronic participation.
Further, all cultural and sports arrangements, fitness centres, swimming halls etc. are closed.
Public transportation are not subject to shut-down but restrictions to accommodate for safe distancing apply.
Restaurants are subject to strict restrictions (closure unless they can accommodate serving guests at table with at least 1 meter’s distance; take-away service is allowed). Most restaurants have as a consequence been closed.
Hotels are subject to restrictions in order to handle quarantines and combat infections. Most hotels are closed.
Beauty saloons, hair dressers, physiotherapists etc. have been ordered closed since 12 March.
Schools, kindergartens and universities have been ordered closed until 26 March.
Certain communes have implemented stricter rules, such as Oslo. The restrictions implemented in Oslo inter alia implies a recommendation that no more than 5 people should gather in the same group, and that people should not gather less than 2 meters apart inside (typically in offices, shops etc.). Some communes have adopted separate quarantine and other restrictions affecting travel inside Norway, the legality of which are so far restricted to absolute necessity.