UPDATE 1-Norway's outgoing government leaves tight budget
OSLO Oct 14 (Reuters) - Norway's outgoing government unveiled a relatively tight 2014 budget as expected on Monday, leaving the incoming government with just weeks to tailor it to fit their agenda.
The government expects the structural non-oil deficit, which excluded lucrative oil revenues, at 2.9 percent of the $790 billion oil fund, or 54 billion crowns ($9 billion) below the government's self imposed spending limit, leaving the new government some room to manoeuvre as it races to revise the bill by November.
"We believe there is some room for additional revenue spending, given our outlook for the Norwegian economy is on the weak side of the Government's expectations," Handelsbanken said in a note.
"That said, the incoming coalition will probably find ways to reorder the ... budget, before increasing revenue spending," it added.
The Labour-led government lost elections last month and is submitting its budget bill as its last formal act before resigning and giving way to Conservative leader Erna Solberg to take over on Thursday.
Solberg will form her government as the economy is slowing with much of the economy outside the oil sector struggling.
Indeed, the government cuts its 2013 mainland growth forecast to 2.2 percent from 2.6 percent, a far cry from last year's 3.4 percent, and lowered its forecast for next year to 2.7 percent from 3 percent.
Still, the government has plenty of leeway to stimulate the economy, if that becomes necessary, as the budget will have a surplus of 10.2 percent of GDP next year, thanks to massive oil revenues.
Norway saves most of its oil revenues in an oil fund and allows the government to spend up to 4 percent of the cash each year. By the end of next year, the government expects the fund to grow to 5,203 billion crowns or $868 billion.
($1 = 5.9957 Norwegian krones) (Reporting by Ole Petter Skonnord; editing by Balazs Koranyi and Toby Chopra)
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