A budget to safeguard Norwegian households

I know a lot of people are affected by higher prices and interest rates now. This budget contributes to security in household finances and the everyday lives of people, young and old, across the whole country. We will support those who are most vulnerable and reinforce public services such as childcare, schools, hospitals and the police. We are making a clear choice in lowering the cost of kindergarten for families with small children. This is all financed within a framework of responsible economic policy”, says Minister of Finance Trygve Slagsvold Vedum (Centre Party).  

The Government wants to preserve Norway’s current conditions of a low unemployment rate and a high number of people in work. Employment continues to increase, and the risk of an abrupt economic setback is lower now than it was a year ago.    

“The Government’s most important job is managing the economy responsibly. It is important to preserve the positive situation we have with low unemployment and high employment, and contribute to lowering inflation, which will ease pressure on household finances. There are clear signs that we are on the right track and inflation is expected to come down next year”, says the Minister of Finance. 
 

The Government’s main priorities in the budget for 2024 are to: 

• keep people in employment, create new jobs and enhance incentives to work 
• sustain quality in essential social welfare within childcare, education, health and elderly care and other important public services  
• support those most vulnerable to the effects of cost-of-living increases 
• prioritise stability and security in Norway in uncertain times 
• support Ukraine, Ukrainian refugees and contribute to stability and security in Europe  
• continue implementing the green transition and take action to achieve our climate goals  

The exceptional current international situation has increased expenditure in certain areas. One of the most significant measures in the budget is Norway’s contribution to Ukraine’s defence against Russian aggression, and the consequences of Russia’s full-scale invasion of Ukraine. These costs are estimated to exceed NOK 44 billion.  

“This is a necessary measure for us to prioritise, which nobody could have foreseen prior to Russia’s illegal war in Ukraine, but on which there is now broad political agreement”, says Finance Minister Vedum. 

The Government’s proposal for a responsible budget  

The Government’s budget proposal builds upon responsible fiscal policy. In 2024, spending from the Government Pension Fund Global is projected at NOK 410 billion, or 2.7 per cent of the projected value for the fund at the start of next year. This is well below the fiscal rule stipulation that transfers from the fund over time should equal 3 percent.   

Spending from the fund is increased in the proposal for 2024, compared to 2023, corresponding to 0.4 percentage points of trend GDP for mainland Norway. The Ministry of Finance’s model calculations imply a more or less neutral fiscal effect on the level of activity in the mainland economy next year.  

“The Government has managed to balance necessary expenditure resulting from the exceptional situation which our country is facing, within a responsible economic framework”, says the Minister of Finance. 

Some of the most important measures in the budget for 2024 

In the budget for 2024 the Government proposes tax relief totaling NOK 6 billion, primarily through removing and phasing out temporary tax increases introduced in the 2023 budget. The high-price contribution from wind and hydropower is proposed to be abolished effective from 1 October 2023. This measure was introduced in the budget for 2023 in order to redistribute more of the extraordinarily high revenues from wind and hydropower and the Government has been clear that the high-price contribution would be removed at the latest by the end of 2024.   

The Government proposed last year to introduce a resource rent tax on onshore wind power. There has been a public consultation on the Government’s proposal. The Government proposes the introduction of the resource rent tax from 1 January 2024, with an effective rate of 35 per cent. At least half of the revenues will be received by the municipalities. The proposal provides a predictable policy framework for the industry, as well as facilitating development of profitable wind power for years to come.  

Income tax for individuals will be reduced by a total of NOK 400 million. Tax will be reduced or remain unchanged for people with low and medium level incomes, while those with the highest incomes will pay slightly increased tax.  The Government proposes to increase the personal allowance and reduce the national insurance contribution rate. Around 85 per cent of personal taxpayers will pay the same or reduced tax in 2024.  
 
The Government proposes no changes to dividend tax and corporation tax in 2024.  

The Government will also begin to phase out the temporary extra employer’s national insurance contribution, which was introduced in the 2023 Budget, by increasing the threshold from NOK 750 000 to 850 000. The Government also proposes to reduce the tax valuation of commercial property located outside of the largest cities, to align tax value more closely with market values for wealth tax purposes.  

“The Government continues to implement a socially and geographically fair distributive tax policy.  Our priority is to keep people employed, create new jobs and enhance incentives to work. We are keeping our promise from earlier this year, that we do not propose to introduce any more major new tax measures for business. On the contrary, we are implementing certain measures to reduce tax, in line with policies previously announced”, says Minister of Finance Vedum.  

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

	NOK billion1
	2022	2022	2023	2024	2025
Private consumption	1 806.4	6.9	-1.0	0.5	2.2
Public consumption	1 037.2	0.1	2.1	1.4	-
Gross fixed investments	1 095.5	4.3	-0.5	-1.5	0.4
Of which: Petroleum extraction and pipeline transportation	176.0	-6.5	9.1	2.3	-6.2
Businesses in mainland Norway	448.8	14.5	2.3	-1.9	-2.4
Housing	232.1	-1.4	-15.0	-4.0	15.6
Public sector	237.8	1.2	0.4	-0.5	-
Mainland Norway demand2	3 762.2	4.9	-0.5	0.1	1.8
Exports	3 100.6	5.9	4.8	3.8	3.0
Of which: Crude oil and natural gas	1 972.9	0.3	3.9	4.1	1.6
Goods and services, excl. oil and gas	947.0	9.4	5.3	3.4	3.7
Imports	1 521.5	9.2	1.9	1.3	1.7
Gross domestic product	5 570.7	3.3	1.0	1.1	1.9
Of which: Mainland Norway	3 570.9	3.8	0.6	0.8	1.9
Other key figures:
Employment, persons		3.9	1.3	0.1	0.5
Unemployment rate, LFS (level)		3.2	3.5	3.7	3.7
Unemployment rate, registered (level)		1.8	1.8	2.0	2.1
Annual wage growth		4.3	5.5	4.9	-
Consumer price inflation (CPI)		5.8	6.0	3.8	2.5
Underlying inflation (CPI-ATE)		3.9	6.4	4.1	2.7
Natural gas prices, USD per MMBtu (current prices)		33.1	13.6	16.0	14.3
Crude oil prices, USD per barrel (current prices)		99	78	73	71
Three-month money market rate, pct 3		2.1	4.2	4.8	4.3
Import-weighted exchange rate (I-44), annual changes in pct4		1.2	6.5	-1.8	0.0

¹ Provisional national account figures for 2022 at current prices. Growth rates from this level are indicated in volume.

² Excluding inventory changes.

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

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

	2022	2023	2024
Total revenues	2 668.4	2 408.7	2 387.3
1   Revenues from petroleum activities	1 313.6	930.1	858.2
1.1   Taxes and duties	720.9	605.6	491.6
1.2   Other petroleum revenues	592.7	324.5	366.6
2   Non-petroleum revenues	1 354.8	1 478.5	1 520.1
2.1   Mainland Norway taxes	1 240.7	1 352.4	1 380.4
2.2   Other revenues	114.2	126.2	139.8
Total expenditure	1 665.9	1 796.0	1 882.6
1   Expenditure on petroleum activities	28.4	27.0	26.0
2   Non-petroleum expenditure	1 637.6	1 769.0	1 856.6
Fiscal budget surplus before transfers to the Government Pension Fund Global	1 002.5	612.7	495.7
-    Net cash flow from petroleum revenues	1 285.2	903.1	832.2
=   Non-oil fiscal surplus	-282.7	-290.5	-336.5
+   Transfer from the Government Pension Fund Global	309.9	290.5	336.5
=   Fiscal budget surplus	27.1	0.0	0.0
+   Net transfer to the Government Pension Fund Global	975.3	612.7	495.7
+   Interest and dividends, etc., on the Government Pension Fund1	279.3	328.9	360.6
=   Fiscal budget and Government Pension Fund consolidated surplus1	1 281.8	941.6	856.3
Memo:
Interest and dividends, etc., on the Government Pension Fund Global..	267.4	312.7	344.0
Market value of the Government Pension Fund Global2	12 355	12 413	15 300
Market value of the Government Pension Fund2	12 688	12 732	15 637
National insurance retirement pension liabilities2,3	9 621	10 175	10 861
Structural non-oil fiscal deficit, NOK billion	338.6	372.3	409.8
Percentage of the fund capital	2.7	3.0	2.7
Percentage of mainland Norway trend GDP	9.5	9.9	10.3
Budget indicator, percentage points	-1.1	0.4	0.4
Real underlying expenditure growth, pct.			0.7

¹ Not including securities gains or losses.

² At the beginning of the year.

³ Net present value of already accrued rights to future retirement pension payments under the national insurance scheme.

Sources: Ministry of Finance and Statistics Norway.