Sunday February 8, 04:23 PM
Norway unveils 11.4bln-euro lending package
OSLO (AFP) - The Norwegian government unveiled Sunday an 11.4- billion-euro (14.7-billion-dollar) lending package aimed at helping companies and individuals struggling with the global economic crisis.
Norway's centre-left government proposed the creation of two funds, each worth 50 billion kroner (5.7 billion euros).
The first is aimed at increasing banks' core capital and the second is aimed at providing credit directly to companies struggling to obtain funds on the market.
"We are doing this to boost employment, strengthen the Norwegian economy and help create jobs," Prime Minister Jens Stoltenberg told reporters.
The package comes on top of a 20-billion-kroner economic stimulus package announced last month, and a 350-billion-kroner bank rescue and loan guarantee package launched in October.
The latter package helped strengthen the banks and they are now no longer in danger of collapse, but they have adopted a more restrictive lending policy in recent months.
A 50-billion-kroner core capital boost corresponds to an additional lending capacity of 400 to 500 billion kroner, the government said.
Any bank taking up the state on its offer must agree to freeze the wages and bonuses of executives earning an annual salary of more than 1.5 million kroner, for 2009 and 2010, as well as a restrictive dividend policy.
"We are putting the community's resources at their disposal and are therefore making demands that they limit the salaries and bonuses of top management," Finance Minister Kristin Halvorsen said.
"The money must be used to increase lending, not salaries," she said.
Amid pressure from public opinion, the heads of Norway's main financial institutions have already agreed to freeze their salaries this year.
The second fund will buy bonds from companies, enabling companies to turn to the state if they are unable to obtain bank financing.
Norway is the world's fifth biggest exporter of oil and third biggest gas exporter, but despite its wealth from those revenues it still risks entering a recession.
Unemployment jumped 0.6 points in January to 2.6 percent, still one of the lowest levels in Europe, but it is expected to increase rapidly.
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