The government, which expects 33,000 asylum seekers in 2016 or roughly three times the annual number in recent years, estimated that the large number of migrants would cost it 9.5 billion kroner ($1.1 billion) more than it had forecast in its October 7th budget.
To finance the extra cost, the right-wing government -- which includes the populist, anti-immigration Progress Party -- proposed to withdraw 1.2 billion kroner from its public pension fund, which is the world's largest sovereign wealth fund.
On Friday the fund, which is made up of Norway's oil and gas revenues, was valued at 7.36 trillion kroner.
The government also plans to redirect 4.2 billion kroner from its international development budget to help cover the refugee costs.
Redirecting funds like that is allowed under OECD rules but is criticised by non-governmental organisations, which fear it will only lead to an increase in migrants fleeing conflicts and hardship.
The remaining 4.1 billion are to be financed by postponing some tax cuts and with other savings, such as slashing refugees' benefits by 20 percent, reducing their Norwegian language class hours and speeding up the deportation of rejected asylum seekers.
The minority government is expected to face thorny negotiations in order to pass its proposal through parliament.