Norwegian local and regional governments have seen their financial positions weakened somewhat over the past two years due to rising costs, according to a report published by Nordic Credit Rating (NCR) today. Cost inflation has reduced operating margins, and higher interest rates have added to budget concerns.
"Continued cost inflation and elevated investment needs is likely to add pressure to county budgets in 2024," said NCR credit analyst Anine Gulbrandsen. "We expect that some counties will implement material cost cuts or use financial reserves to cover additional costs and investment needs."
The report further suggests that higher costs for essential services to residents will put additional strain on budgets. Non-essential services are more likely to face cost cuts, while essential services will be prioritized within tight budgets. Despite expecting lower operating margins in 2024, financial reserves are strong following recent gains and provide additional resilience to absorb increasing investment needs and rising expenditures.
Contacts:
Anine Gulbrandsen, analyst, +4797501657, anine.gulbrandsen@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com