Energy-rich Norway sees government debt drop

Aug. 14 (UPI) -- Norway, the European leader in oil and gas production, reported government debt declined nearly 20 percent from the first quarter of the year.

Central government debt is at a short-term low point for Norway. The government's statistics office reported second quarter debt at $63.3 million, compared with $79.1 million from the first quarter. Second quarter debt is 3.5 percent less than the same quarter last year.

The Central Bank of Norway said it held four government bond auctions in the second quarter of the year. Bond auctions are typically used to help finance national debt.

In an assessment last month, the International Monetary Fund said Norway's economy is recovering slowly from the steep oil market decline last year. Inflation is lower than expected and the IMF said household debt and an overheated housing market were just some of the risks for the country. Monetary policy should remain accommodative, but the IMF said the country should start to look for new sources of revenue because lower oil prices are "seemingly the new norm."

The Central Bank in June left its key policy rate unchanged at 0.5 percent.

Bank Gov. Oystein Olsen early this year said oil and gas production peaked more than a decade ago, though he added that the sector as a whole may have been underestimated. Nevertheless, he said Norway's economy should start adding in more non-oil capacity.

"We need more legs to stand on," he said.

Total petroleum production in Norway so far this year is more than 1 percent, or about 9 million barrels, higher than last year.