OSLO: Negotiations over Norway's 2017 fiscal budget broke down on Wednesday when a second centrist party abandoned talks with the right-wing minority government, putting the ruling coalition at risk of collapse.
Disappointed by a lack of progress, including on policies to combat carbon emissions, Christian Democrat leader Knut Arild Hareide pulled his party out of the talks just a day after the Liberal Party walked out.
In power since 2013, Prime Minister Erna Solberg and Finance Minister Siv Jensen have relied on support from the two smaller centrists parties to cut taxes and raise spending to counter an economic downturn triggered by falling oil prices.
If they fail to bring either of the two parties back to the negotiation table before a Dec. 5 deadline, Solberg's government - that is made up of her Conservatives and the Progress Party - could be forced to resign.
"We see no chance of finding a solution based on the latest proposals we have received," Hareide told reporters. He said he would only be willing to return to negotiations if the government fundamentally changed its position.
"It's up to the government to secure a budget," he added. Â With an $862 billion sovereign wealth fund, more than twice Norway's annual gross domestic product, the key debate is not over how much money to spend in 2017 but rather how to compromise on the four parties' conflicting policy goals.
There are big differences, for example, over petrol and diesel taxes, which the centrists want to raise sharply to help cut greenhouse gas emissions while the government has only agreed to a small increase.
Copyright Reuters, 2016
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