Key points: How Norway's state budget affects foreigners in the country
Cuts to childcare costs, modest tax changes, more expensive fuel, and a continuation of the electricity subsidy scheme were among the policies unveiled in Norway's state budget on Friday - one which the government hopes will also see inflation decrease.
Trygve Slagsvold Vedum unveiled the state budget for 2024 in parliament on Friday morning.
"I know that many notice higher prices and interest rates. This budget will contribute to more security in people's everyday lives - no matter where in the country they live and no matter how old or young they are," Vedum said in a governemnt press release.
READ MORE: Norway's government boosts use of oil money in 'responsible' budget
Norway's budget is not expected to affect interest rates
In the run-up to the budget being unveiled, there were concerns that the government would lean too heavily on the country's oil fund for spending.
The government will use over 409 billion of the fund for state spending in 2024. This corresponds to around 2.7 percent of the fund's total value.
The good news for those with outstanding loans and mortgages is that oil money is below the 3 percent threshold and isn't expected to affect interest rates.
It is expected that the central bank will stick to its current plan and raise the key policy rate to 4.5 percent in December. The hike in December will likely signal the interest rate peak.
"What Norges Bank is trying to achieve is to curb price inflation. To make it happen, they allowed for an oil money use of 2.7 per cent. So in that sense, the government's budget seems to be in line with them and will not contribute to higher interest rates," Kari Due-Andresen, chief economist of Akerhus Eindom, told public broadcaster NRK.
Inflation to ease and the economy to grow
The government expects Norway's economy to keep increasing and inflation to decrease next year. The Norwegian economy will grow by 0.8 percent next year compared to this year, according to forecasts.
Norway's finance ministry also expects inflation to decrease. Next year, it expects prices in Norway to rise 3.8 percent. Prices in Norway in August were 4.8 percent higher than 12 months before.
Unemployment is expected to rise next year, however. The Ministry of Finance forecasted an unemployment rate of 2 percent in 2024, up from 1.7 percent in 2023.
Overall, the budget has been described as neutral and is expected to impact economic growth by 0.1-0.6 percentage points. Last year, the budget was designed to cool the economy and negatively affected growth by -0.6 percentage points.
Childcare costs to decrease and modest tax changes
The government will cut the maximum monthly price for a kindergarten place from 3,000 kroner to 2,000 kroner a month, excluding additional charges such as food. This change will take effect from August 2024.
Families in the 189 most sparsely populated local authorities will see a bigger cut. In these municipalities, a kindergarten place will cost just 1,500 kroner per month.
Income tax will see very small cuts: those who earn up to 800,000 kroner per year will receive a cut that equates to around 200 to 600 kroner per year. Those who earn over 1 million kroner per year will pay around 800 kroner more in income tax.
The deductible for being a trade union member will be increased to 8,000 kroner in 2024. The travel deduction for commuters is also being increased slightly, and there are changes to taxes for long-haul drivers and those who live in work accommodation.
The government's budget partner is not satisfied with budget
The Socialist Left Party, which the minority government relies on for support, has said that the budget still doesn't do enough to support those struggling with cost of living increases.
"We are in an expensive time. Everything becomes more expensive. This budget does not remove food queues, and it does not help families who have received tens of thousands of kroner in increased interest," Kjersti Bergstø, party leader, said.
Bergstø added that the budget did not take the environment seriously enough.
To gain majority support in parliament for the budget, the current government will negotiate with the Socialist Left Party, which may change the policies and levels of spending floated in the initial budget.
Given the comments, it is expected the party will push the governemnt to do more to ease the impact of cost of living increases in upcoming negotiations.
Doctors to become expensive and petrol to cost more
The deductible for visiting a doctor, psychologist, outpatient clinic, using patient travel and receiving an x-ray will become 4.35 percent more expensive. However, the threshold for deductible exemption will remain the same. This means that after you have paid more than 3,040 kroner per year in healthcare deductibles, the rest is paid for by the government.
Fuel will become more expensive as the CO2 tax will be increased.
The government increases spending on local services
Some 6.4 billion kroner will be given to local authorities in Norway to be used at their discretion. Of the funding, 5.1 billion will go to municipalities, and 1.3 billion will be made available at the county level.
Out of this budget, 150 million kroner will be used to create more services for mental health issues and substance abuse problems.
The budget for the police will be increased by 500 million kroner.
Energy support scheme to continue
The electricity subsidy will continue in 2024. From the budget, 9.75 billion has been set aside to pay for it.
The threshold to receive support has been increased slightly. From the beginning of next year, the subsidy will not kick in until the price rises above 73 øre per kilowatt-hour, rather than 70 øre at present.
The state will continue to pay 90 percent of the hourly energy price above 70 øre per kilowatt hour.
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Trygve Slagsvold Vedum unveiled the state budget for 2024 in parliament on Friday morning.
"I know that many notice higher prices and interest rates. This budget will contribute to more security in people's everyday lives - no matter where in the country they live and no matter how old or young they are," Vedum said in a governemnt press release.
READ MORE: Norway's government boosts use of oil money in 'responsible' budget
Norway's budget is not expected to affect interest rates
In the run-up to the budget being unveiled, there were concerns that the government would lean too heavily on the country's oil fund for spending.
The government will use over 409 billion of the fund for state spending in 2024. This corresponds to around 2.7 percent of the fund's total value.
The good news for those with outstanding loans and mortgages is that oil money is below the 3 percent threshold and isn't expected to affect interest rates.
It is expected that the central bank will stick to its current plan and raise the key policy rate to 4.5 percent in December. The hike in December will likely signal the interest rate peak.
"What Norges Bank is trying to achieve is to curb price inflation. To make it happen, they allowed for an oil money use of 2.7 per cent. So in that sense, the government's budget seems to be in line with them and will not contribute to higher interest rates," Kari Due-Andresen, chief economist of Akerhus Eindom, told public broadcaster NRK.
Inflation to ease and the economy to grow
The government expects Norway's economy to keep increasing and inflation to decrease next year. The Norwegian economy will grow by 0.8 percent next year compared to this year, according to forecasts.
Norway's finance ministry also expects inflation to decrease. Next year, it expects prices in Norway to rise 3.8 percent. Prices in Norway in August were 4.8 percent higher than 12 months before.
Unemployment is expected to rise next year, however. The Ministry of Finance forecasted an unemployment rate of 2 percent in 2024, up from 1.7 percent in 2023.
Overall, the budget has been described as neutral and is expected to impact economic growth by 0.1-0.6 percentage points. Last year, the budget was designed to cool the economy and negatively affected growth by -0.6 percentage points.
Childcare costs to decrease and modest tax changes
The government will cut the maximum monthly price for a kindergarten place from 3,000 kroner to 2,000 kroner a month, excluding additional charges such as food. This change will take effect from August 2024.
Families in the 189 most sparsely populated local authorities will see a bigger cut. In these municipalities, a kindergarten place will cost just 1,500 kroner per month.
Income tax will see very small cuts: those who earn up to 800,000 kroner per year will receive a cut that equates to around 200 to 600 kroner per year. Those who earn over 1 million kroner per year will pay around 800 kroner more in income tax.
The deductible for being a trade union member will be increased to 8,000 kroner in 2024. The travel deduction for commuters is also being increased slightly, and there are changes to taxes for long-haul drivers and those who live in work accommodation.
The government's budget partner is not satisfied with budget
The Socialist Left Party, which the minority government relies on for support, has said that the budget still doesn't do enough to support those struggling with cost of living increases.
"We are in an expensive time. Everything becomes more expensive. This budget does not remove food queues, and it does not help families who have received tens of thousands of kroner in increased interest," Kjersti Bergstø, party leader, said.
Bergstø added that the budget did not take the environment seriously enough.
To gain majority support in parliament for the budget, the current government will negotiate with the Socialist Left Party, which may change the policies and levels of spending floated in the initial budget.
Given the comments, it is expected the party will push the governemnt to do more to ease the impact of cost of living increases in upcoming negotiations.
Doctors to become expensive and petrol to cost more
The deductible for visiting a doctor, psychologist, outpatient clinic, using patient travel and receiving an x-ray will become 4.35 percent more expensive. However, the threshold for deductible exemption will remain the same. This means that after you have paid more than 3,040 kroner per year in healthcare deductibles, the rest is paid for by the government.
Fuel will become more expensive as the CO2 tax will be increased.
The government increases spending on local services
Some 6.4 billion kroner will be given to local authorities in Norway to be used at their discretion. Of the funding, 5.1 billion will go to municipalities, and 1.3 billion will be made available at the county level.
Out of this budget, 150 million kroner will be used to create more services for mental health issues and substance abuse problems.
The budget for the police will be increased by 500 million kroner.
Energy support scheme to continue
The electricity subsidy will continue in 2024. From the budget, 9.75 billion has been set aside to pay for it.
The threshold to receive support has been increased slightly. From the beginning of next year, the subsidy will not kick in until the price rises above 73 øre per kilowatt-hour, rather than 70 øre at present.
The state will continue to pay 90 percent of the hourly energy price above 70 øre per kilowatt hour.
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