Scandinavian countries launch economic virus response

Norway and Sweden on Friday launched a number of economic measures aimed at mitigating the economic consequences of the COVID-19 outbreak.

The Norwegian government presented measures to stimulate the economy, including immediate measures to avoid bankruptcies, and efforts aimed at both the wider economy and especially affected business sectors.

The government said the measures, which included amended rules for taxes and sick pay, would likely cost around 6.5 billion kroner in total ($654 million or 589 million euro), but Prime Minister Erna Solberg stressed that more would be added if necessary.

"Even if the measures we present today amount to many billions of kroner, it's still only the beginning," Solberg told journalists.

Measures also included suspending the passenger flight tax to help ailing airlines such as Norwegian Air Shuttle, hit hard by the fall in demand.

Norway's central bank also announced early Friday it was cutting its key rate by 0.5 points to 1 percent.

"There is considerable uncertainty about the duration and the consequences of the epidemic and there is a risk of a pronounced economic slowdown," central bank governor Oystein Olsen told journalists.

Olsen added the bank was following developments and was "ready to further reduce rates".

Meanwhile in neighbouring Sweden the central bank said it stood ready to lend up to 500 billion kronor ($51 billion, 45 billion euros) to companies via the banking system.

In addition to the rate cut, Norway's central bank said it would offer extraordinary loans to banks, while the finance ministry said it was allowing banks to run down capital buffers to free up liquidity.