Norway’s revised budget cuts oil fund spending by nearly 5 billion kroner

The Norwegian government will spend 4.9 billion kroner less than planned in its revised national budget, tightening the use of oil revenues, according to key figures released Tuesday morning, Dagbladet reports.

Finance Minister Jens Stoltenberg presented the figures ahead of the full budget proposal, which comes just days after Norway’s central bank raised interest rates by 0.25 percentage points. Economists had warned that excessive oil fund spending could keep interest rates elevated.

Strategic restraint ahead of coalition talks
Jan Ludvig Andreassen, chief economist at Eika Group, called the budget “unrealistically tight” and suggested the government is holding back oil funds to strengthen its position in upcoming negotiations with its support parties—the so-called tutti-frutti alliance of the Centre Party, the Greens (MDG), the Socialist Left (SV), and the Red Party.

“Stoltenberg needs to give them some wins,” Andreassen told Dagbladet TV. “He’ll let MDG and SV celebrate in the media so they look like budget winners. It’s very dangerous for the Labour Party if these parties fall below the electoral threshold.”

Other economists, including Marius Gonsholt Hov of Handelsbanken and Kjersti Haugland of DNB Carnegie, agreed that the revised spending—2.7 percent of the oil fund, below the 3 percent fiscal rule—would not significantly impact interest rates. Kyrre Knudsen of Sparebanken 1 Sør-Norge noted the government is aligning spending growth with economic growth, avoiding extra stimulus.

Coalition demands and regional disputes
Negotiations between Labour and its support parties begin late next week, with each party bringing demands. Stoltenberg acknowledged the talks would be “challenging” but cited past successes on childcare, public transport, and healthcare reforms.

The budget again proposes scrapping the Stad Ship Tunnel, a coastal safety project backed by the Centre Party. “It’s typical—projects outside Oslo struggle, while Oslo-area projects face cost overruns,” said Centre Party spokesperson Bjørn Arild Gram.

The Socialist Left (SV) called for a budget addressing economic uncertainty, with MP Marthe Hammer stating, “Ordinary earners face hardship from global instability and rate hikes. This is about how we spend, not just what we spend.”

Opposition parties will question the budget in parliament by May 27, with all five coalition partners negotiating jointly at the Storting.