A budget to provide security in demanding times

"War in Europe has created uncertainty. In our revised budget proposal for 2024 we are increasing investment in defence capability and policing, to safeguard Norwegian people. This expenditure is within a policy framework which will allow for improved household finances for people throughout Norway," said Minister of Finance Trygve Slagsvold Vedum (Centre Party).

The government’s ambition is for households to have more money to spend. The economy is about to turn a corner, after which people should have increased spending power and more flexibility in household finances.  
"We are continuing responsible management of the economy and making choices to guide us sensibly through a time of high inflation and high interest rates. Our projections indicate we are currently on a path to improved personal finances, where households should have more money left over after their bills are paid", said Vedum.

The Norwegian economy has fared well through a period of uncertainty. The revised budget is built on projections which show increasing growth, high investment levels, and continued low unemployment.

Better personal finances: Falling inflation and increased spending power

Although still above the target, inflation has slowed markedly from the high levels of autumn 2022, and it is expected to continue to slow. In recent years consumer price inflation has exceeded wage growth, while this year’s budget is based on projections which indicate an increase in spending power for households.

"Lower inflation levels indicate that pay could increase more than consumer prices. This will improve household finances and contribute to gradual growth in consumer spending and housing investment," said the Minister of Finance. 

A higher number of people in employment

Norwegian economic growth has been stronger than projected in the government’s National Budget last autumn, despite the contractionary effect of interest rates. The labour market in particular has proved to be robust. Employment has grown and the registered unemployment rate has remained low. 

“Having a job is the most important factor for most of us in our day-to-day personal finances. A high level of economic activity going forward means that the majority will remain in employment. There are nevertheless too many people who remain outside the labour market, and we need to get them into employment. Work is important for this government: helping more people into jobs and ensuring fewer rely on benefits,” said Vedum.

Priorities in the budget

• Increase defence capability. It is necessary for Norwegian defence to adapt to current challenges. The government proposes 7 billion NOK to strengthen Norwegian defence capability. The government’s combined proposals for increased defence spending mean Norway will reach the ambition of spending 2 per cent of GDP on defence in 2024.
• Combating gang crime. The government wants people to feel safe in their neighbourhoods and everyday environments. The revised proposal significantly increases police budgets with more than 1.6 billion NOK, to reinforce crime fighting, particularly organised crime and gang crime.
• Reduce hospital waiting times. It is important to reduce waiting times so patients can receive treatment sooner. The proposal includes 2 billion NOK in increases to hospital budgets.
• Increased support to Ukraine. The situation in Ukraine has increased in seriousness and uncertainty. It is therefore necessary to increase support to Ukraine’s fight against a brutal aggressor. The budget proposal increases this year’s contribution from the Nansen programme to 22 billion NOK.

Responsible management

Spending from the Government Pension Fund Global is currently projected to correspond to 2.7 per cent of the value of the fund at the start of the year. The Government’s revised budget proposal thus remains fiscally responsible and aligned with the original National Budget proposal last autumn. Petroleum revenue spending is projected to be well below the fiscal rule stipulation that transfers from the fund over time should equal 3 percent. The revised budget allocates 9 billion NOK in increased spending from the Government Pension Fund Global compared with the National Budget proposal.

This expenditure includes financing 60 billion NOK relating to the war in Ukraine and its consequences. 

"The reality we face in today’s circumstances would make it irresponsible not to strengthen our defence capability and to continue to stand with Ukraine. Neither can we neglect to safeguard Norwegian people, we need more men and women in uniform," said Vedum.

Abolishing temporary taxes from the 2023 budget

The government has made clear that it will abolish the temporary taxes introduced to finance extraordinary expenditure in the 2023 budget. The high-price contribution from wind and hydropower was abolished from 1 October 2023.

The Government began phasing out the temporary extra employer’s national insurance contribution from 1 January 2024, by increasing the threshold from 750 000 NOK to 850 000 NOK. The revised budget proposal for 2024 includes notice of the government’s intention to completely abolish the temporary extra employer’s national insurance contribution from 1 January 2025.

Table 1: Key figures for the Norwegian economy. Percentage volume change from previous year, unless otherwise stated.

	NOK billion1
	2023	2023	2024	2025
Private consumption	1 924.1	-0.7	1.0	2.0
Public consumption	1 124.8	3.6	2.1	.
Gross fixed investments	1 199.9	0.3	-1.7	0.4
Of which: Petroleum extraction and pipeline transportation	215.9	10.5	7.3	-4.0
Businesses in mainland Norway	503.4	4.9	-2.6	-3.4
Housing	207.7	-15.6	-16.1	13.0
Public sector	261.5	2.8	4.1	.
Mainland Norway demand2	4 021.5	0.5	0.2	1.8
Exports	2 419.6	1.4	2.4	4.5
Of which: Crude oil and natural gas	1 194.1	-1.1	-0.2	4.4
Goods and services, excl. oil and gas	1 045.9	6.5	3.6	2.9
Imports	1 665.2	0.7	2.7	2.7
Gross domestic product	5 128.6	0.5	0.7	2.4
Of which: Mainland Norway	3 857.5	0.7	0.9	1.9
Other key figures:
Employment		1.3	0.5	0.5
Unemployment rate, LFS (level)		3.6	3.8	3.9
Unemployment rate, registered (level)		1.8	2.0	2.1
Annual wage growth		5.2	5.2	.
Consumer price inflation (CPI)		5.5	3.9	2.8
Underlying inflation (CPI-ATE)		6.2	4.3	3.0
Crude oil prices, USD per barrel (current prices)		82	83	78
Natural gas prices, USD per MMBtu (current prices)		13.6	10.0	11.2
Three-month money market rate, pct3		4.2	4.7	4.2
Import-weighted exchange rate (I-44), annual changes in pct 4		7.9	1.1	0.6

¹ Provisional national account figures at current prices.

² Excluding inventory changes.

³ Assumption used in calculations based on forward rates in May.

⁴ Positive figures indicate a depreciation of the NOK.

Sources: Statistics Norway, Norges Bank, the Norwegian Labour and Welfare Administration, Reuters, ICE, Macrobond and the Ministry of Finance.

Table 2: Key figures for the fiscal budget and the Government Pension Fund. NOK billion. 

	Accounts		Estimate
	2022	2023	2024
Total revenues	2 668.4	2 494.4	2 257.7
1   Revenues from petroleum activities	1 313.6	1 008.5	702.8
1.1   Taxes	720.9	623.2	415.8
1.2   Other petroleum revenues	592.7	385.2	287.0
2   Non-oil revenues	1 354.8	1 485.9	1 554.9
2.1   Taxes from mainland Norway	1 240.7	1 352.1	1 393.3
2.2   Other revenues	114.2	133.8	161.7
Total expenditure	1 665.9	1 806.8	1 922.9
1   Expenditure on petroleum activities	28.4	30.4	30.1
2   Non-oil expenditure	1 637.6	1 776.4	1 892.8
Fiscal budget surplus before transfer to the Government Pension Fund Global	1 002.5	687.6	344.8
-    Net cash flow from petroleum revenues	1 285.2	978.1	672.7
=   Non-oil fiscal surplus	-282.7	-290.5	-337.8
+   Transfer from the Government Pension Fund Global	309.9	286.2	337.8
=   Fiscal surplus	27.1	-4.2	0.0
+   Net provision for the Government Pension Fund Global	975.3	691.8	334.8
+   Interest and dividend income, etc., in the Government Pension Fund1	279.3	354.9	405.8
=   Combined surplus in the fiscal budget and the Government Pension Fund1	1 281.8	1 042.5	740.6
Memo:
Interest and dividend income, etc., on the Government Pension Fund Global	267.4	338.6	387.8
Market value of the Government Pension Fund Global2	12 355	12 413	15 761
Market value of the Government Pension Fund2	12 688	12 732	16 115
Structural non-oil fiscal deficit, NOK billion	330.8	369.5	418.7
Per cent of Fund capital	2.7	3.0	2.7
Per cent of mainland Norway trend GDP	9.2	9.7	10.4
Fiscal impulse, percentage points3	-0.9	0.5	0.7
Real underlying expenditure growth, per cent	1.1	2.7	2.5

¹ Does not include foreign exchange gains or losses.

² At the beginning of the year. For the Government Pension Fund Global, the number differs from Norges Bank’s annual reports. The number reported in the table is less accrued, unpaid management fees and the Treasury’s claims against the Fund.

³ Positive numbers indicate an expansionary fiscal stance. The indicator does not take into consideration that different revenue and expenditure items may differ in their effect on economic activity.

Sources: The Ministry of Finance and Statistics Norway.