In response to high inflation and the consequences of the war in Ukraine, the Norwegian government has released a revised budget that prioritizes crucial public services such as healthcare, police, and refugees. In uncertain times, the Norwegian economy is performing well compared to other European economies. While unemployment is still low and economic activity is high, growth has started to decelerate. Nevertheless, the government has proposed an increase in allocations to Norwegian municipalities so that they can better host Ukrainian refugees.
The government has also proposed an increase in spending on hospitals, the police, and Norwegian municipalities, in addition to compensation for wage growth and inflation. Low-income pensioners will receive a tax break of NOK 1.4 billion, reducing tax by up to around NOK 4,500 for those with low pensions. The government also intends to increase support for Ukraine through the Nansen Support Programme for Ukraine and to receive and integrate Ukrainian refugees into Norway.
“The government will continue to strengthen incentives to work. In this budget, we intend to make everyday life a little easier for a number of employed people. We aim to facilitate job security, and that more people find employment. That is one of the most important things we can do. We must also support those who are not able to participate in the labor market,” said Minister of Finance Trygve Slagsvold Vedum.
The government’s proposal is to increase the non-taxable allowance for board (food) for commuters in portacabin accommodation and long-distance drivers. The government will continue the temporary expansion to housing allowance in 2023, increase spending on labor market measures, and increase support for energy-saving measures in municipal housing.
The structural non-oil deficit will increase by NOK 56 billion, corresponding to a withdrawal of 3.0% from the Government Pension Fund Global. The increased use of petroleum revenue is mainly due to compensation for high wage and price growth, a decline in revenues from electricity, support for Ukraine through the Nansen Programme for Ukraine, and increased refugee-related expenditure.
“Norwegian support for Ukraine can help ensure the stability of Europe and to aid the Ukrainian people. It is also crucial for our own security that Russia is not successful in its wars of aggression. Norway’s Nansen Programme for Ukraine enjoys broad political support in Norway. We will stand up for the Ukrainians as long as necessary,” said Minister of Finance Vedum.