High interest rates and cost inflation had a negative impact on Norwegian municipal budgets, debt and cash balances in 2023, Nordic Credit Rating (NCR) said in a report published today. According to recently published data, operating margins fell across the sector, and high interest costs weighed on cash balances. Gross debt levels remained under control, but rising costs and significant cash outflows resulted in material increases in nearly all municipal net debt burdens.
Earlier this month, the central bank decided to maintain its key policy rate at 4.5%, and indicated that it is likely to remain at that level for some time. The decision reflects ongoing efforts to reduce inflation to the bank's 2% annual target.
"We believe that this will force municipalities to focus on spending priorities and take a cautious approach to debt-financed investment in the remainder of 2024," said NCR credit analyst Anine Gulbrandsen.
Contacts:
Anine Gulbrandsen, analyst, +4797501657, anine.gulbrandsen@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com