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UPDATE 1-Norway PM issues ultimatum to junior government partners

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OSLO, Aug 23 (Reuters) - Norway's Conservative Party Prime Minister Erna Solberg has set a Monday deadline for the three junior partners in her coalition to decide whether they should remain in her government.

If one of the parties leave, Norway faces the prospect of a minority government, either with Solberg as prime minister or with opposition Labour Party leader Jonas Gahr Stoere taking the reins, depending on the support found in parliament.

The four ruling parties are at odds over how to pay for investments in roads and public transport. Parties that want to stay in the cabinet must accept an ultimatum presented by Solberg if they want to stay in the cabinet.

"I've presented a final proposal," Solberg said late on Friday.

Faced with opinion polls showing declining support ahead of local elections on Sept. 9, the right-wing Progress Party has called for large cuts in road tolls - a proposal opposed by the environmentally-minded Liberal Party.

The Norwegian constitution does not allow snap elections and the next parliamentary election is still two years away. (Reporting by Terje Solsvik and Nerijus Adomaitis; Editing by Kirsten Donovan)