Experts Criticize Norway's Budget. They Calculate How to Save 40 Billion Kroner
The Fiscal Policy Committee has published its annual opinion on Norway's public finances. The document covers the 2026 budget, defense, taxes, and the labor market.
The document analyzes the compliance of fiscal policy with current regulations.
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The Advisory Council for Fiscal Policy Analysis assesses the long-term stability of Norway's finances. It examines whether fiscal policy complies with existing rules. The opinion for 2026 was presented on February 3. It includes recommendations regarding public spending and the tax system.
Budget and Defense Under Pressure
The 2026 budget relies on one-off revenues. It includes the reversal of loss reserves exceeding 5 billion kroner. The committee points to selective changes in estimates, which are said to contradict the intent of the spending rule. Attention was drawn to a departure from good budgetary practice.
The opinion again raises the need to review the rules for applying the spending rule. The committee points to the rapid increase in defense spending and highlights the risk of poor cost control. Investments should remain within budgetary limits and also take future maintenance costs into account. The 2025 defense analysis indicates that this is currently not being met.
The opinion again raises the need to review the rules for applying the spending rule. The committee points to the rapid increase in defense spending and highlights the risk of poor cost control. Investments should remain within budgetary limits and also take future maintenance costs into account. The 2025 defense analysis indicates that this is currently not being met.
Spending on transport infrastructure brings fewer benefits than in countries with a similar economic profile.Photo: NAF
Taxes, Investments, and the Labor Market
The committee draws attention to the way the so-called fiscal space is defined, noting that it is not a fixed value. If the recommendations were implemented, it could increase significantly. The proposed spending cuts could free up over 40 billion kroner annually. Additionally, tax reliefs exceeding 50 billion kroner were identified.
A decline in efficiency has been noted in transport investments, with expenditures higher than in comparable countries. Only one-fifth of the projects from the National Transport Plan 2025–2036 have a positive net benefit. The committee indicates that new projects should only be launched if they have a positive socio-economic return. In the section on the labor market, low employment rates among people in their 40s and 50s were highlighted. The authors noted that many employees frequently take sick leave, which burdens the labor market.
A decline in efficiency has been noted in transport investments, with expenditures higher than in comparable countries. Only one-fifth of the projects from the National Transport Plan 2025–2036 have a positive net benefit. The committee indicates that new projects should only be launched if they have a positive socio-economic return. In the section on the labor market, low employment rates among people in their 40s and 50s were highlighted. The authors noted that many employees frequently take sick leave, which burdens the labor market.
The document also addresses the electricity market. Subsidy mechanisms for household electricity are said to weaken price signals. At the same time, a lack of support for businesses was noted. The committee emphasizes that the pension system should continue to support longer professional activity.
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