On 13 March 2020 the Norwegian government proposed several mitigating measures against the negative effects of the measures taken against the spread of the Covid-19 virus in Norway. The number of proposed measures have increased over the last two weeks.

The main measures are:

1. the introduction of a NOK 50 billion SME liquidity credit facility to be guaranteed 90% by the State and to be administered by the banks;
2. the re-establishment of the Norwegian State Bond Fund (Nw: Statens Obligasjonsfond), with a NOK 50 billion mandate to invest in the Norwegian bond market;
3. reduction in the countercyclical capital buffer for financial institutions from 2.5% to 1%;
4. reduction in the period which the employer has to pay salaries following temporary lay-offs from 15 days to 2 days;
5. deferred payment of national wealth tax for businesses with deficits;
6. deferred deadline for the advance payment of tax for Q1 2020;
7.  reduction in VAT rates for service and travel and deferred payment deadlines for VAT and employers’ national insurance contributions;
8. option to apply up to NOK 30 million of deficit for 2020 against any taxable surplus in 2019, i.e. that paid-in taxes for 2019 will be reimbursed for 2020.

State guarantee relating to banking credit facilities

On 15 March 2020, the Norwegian government launched its crisis mitigation package directed towards Norwegian businesses. One of the measures was a NOK 50 billion state guarantee credit facility aimed towards SMEs. The proposal was adopted by the Norwegian parliament on 21 and 24 March 2020, and is currently awaiting approval by the ESA due to state aid constraints.

Main terms:

1. to be administered solely by banks with license to operate in Norway and with automatic issue (reporting duty only) of state guarantees covering 90% of any loss;
2. only applies to SMEs (less than 250 employees, turnover of no more than EUR 50 million or balance sheet of no more than EUR 43 million), however excluding real estate owning companies;
3. applicants must have business operations in Norway (i.e. registered with the Norwegian Register of Business Enterprises);
4. the business must be in severe lack of liquidity due to Covid-19, and (in the banks’ opinion) viable post-Covid-19, i.e. that the business would be profitable under normal market conditions;
5. maximum amount of NOK 50 million per business, calculated on the basis of 2 times the wage cost in 2019 or 25% of the turnover in 2019;
6. term of less than 3 years, preferably shorter with extension options;
7. same commercial terms as under normal circumstances with respect to margin, security, guarantees etc.;
8. not to be used to prepay existing debt or payment of instalments or interest under existing facilities;
9.  restriction on dividends as long as the loan is outstanding; and
10. 50 bps guarantee premium to the State.

Re-establishment of the Norwegian State Bond Fund (Nw: Statens Obligasjonsfond)

The Norwegian State Bond Fund (Nw: Statens Obligasjonsfond) was originally established in 2009 to mitigate the effects of the credit crunch, and was wound up in 2014 when its investments had been repaid. On 15 March 2020, the government proposed to re-establish the fund with an investment mandate of up to NOK 50 billion targeting mid-size and larger businesses.

Main terms:

1. details of the specific mandate is yet to be determined;
2. the fund will be administered by the National Insurance Scheme Fund (Nw: Folketrygdfondet);
3. only bonds issued by Norwegian issuers;
4. a substantial part of its investments will be in bonds issued by non-financial businesses, primarily investment grade, but also high yield;
5. investments can be made towards the issue of new bonds or by purchase of existing bonds; and
6. requirements as to the credit rating of the issuer.