AFP - Norway's left-wing coalition held onto a razor-thin majority in Monday's general election after a campaign pitting improvements to the welfare state against tax cuts in the oil-rich economy.
   
Labour Prime Minister Jens Stoltenberg declared victory for his government, which was seen winning a slim, one-seat majority with 99.4 percent of votes counted.
   
"It's wise to be a little cautious, but seeing how things are looking, it seems we will be able to continue" in power, Stoltenberg said during a meeting of party leaders in parliament.
   
If the results are confirmed, Stoltenberg's government would be the first to win re-election in the wealthy Scandinavian country since 1993.
   
The outgoing coalition, made up of the Labour Party and two junior partners, will hold 86 of the 169 seats in parliament, losing one seat from their previous mandate.
   
A total of 85 seats are needed for an absolute majority.
   
The four right-wing opposition parties were seen winning 83 seats, gaining one seat and including 40 for the populist Progress Party which also made headway.
   
"I will also exercise caution but everything seems to be pointing towards a victory for the 'red-green' coalition," said Progress Party leader Siv Jensen.
   
Stoltenberg's Labour Party, in power since 2005 with the Socialist Left and the Centrists, vowed during the election campaign to improve the welfare state and prioritise employment.
   
Stoltenberg campaigned on his success at steering Norway through the global economic crisis with little harm done to the economy, thanks to the state's dutiful investment since 1996 of nearly all of its oil revenues in a massive state pension fund.
   
The "oil fund", invested in international stocks and bonds and designed to finance the generous social welfare state the day the wells run dry, was worth 277 billion euros (395 billion dollars) at the end of June.
   
While most Western economies have been floored by the economic crisis, Norway, the world's fifth-biggest exporter of 'black gold' which has twice rejected EU membership in a referendum, experienced only a brief recession and enjoys Europe's lowest unemployment rate at just 3.0 percent.
   
Yet many Norwegians expressed frustration during the campaign over what they perceive as a dilapidated welfare state despite some of the highest taxes in the world, and complained that they have not reaped enough of the benefits of Norway's oil wealth.
   
"Norway is doing well because we have oil, not thanks to the government's policies," commented Ole, a 53-year-old engineer who said he wanted to see a better business climate.
   
The right wing had vowed to implement tax cuts and privatisations.
   
Conservative Party leader Erna Solberg, 48, seen as Stoltenberg's main challenger, had insisted that the right was "not going to tear down the welfare state".
   
The populist Progress Party had meanwhile pledged to use more of the oil wealth to improve the welfare state and invest in infrastructure.
   
It appeared to improve its score from the 2005 election, when it won 38 seats in parliament, to 40 seats.
   
But the populists, who have criticised what they perceive as the "sneak Islamisation" of Norwegian society, left the right-wing divided, with two centre-right parties refusing to collaborate with them because of their anti-immigration stance.
   
The Conservatives were the only party openly in favour of collaborating with the populists.
   
"It would have been easier if all of the parties had adopted the same open-minded position as us," Solberg said on election night.