The Norwegian government has proposed a significant increase in spending from its oil fund for the 2026 budget. This decision, announced on Wednesday, comes from the Labor Party, which secured a second term in office during the general elections held last month. The draft budget outlines a plan to allocate $57.4 billion (approximately 579 billion Norwegian crowns) from the Government Pension Fund Global (GPFG), often referred to as Norway’s oil fund. This amount surpasses last year’s spending of $54.6 billion (around 550.6 billion crowns) and accounts for 2.8% of the fund’s total value.
The GPFG, valued at $2 trillion, is the world’s largest sovereign wealth fund, established to manage the country’s oil and gas revenues. The fiscal rule governing withdrawals stipulates that spending should, on average, be limited to the expected real return on the fund, currently estimated at 3%. This approach ensures that Norway can maintain its generous welfare policies while gradually reducing reliance on direct oil and gas income.
Projected Revenue from Petroleum Activities
In the proposed 2026 budget, the government anticipates a net cash flow from petroleum activities of $65.8 billion (approximately 664 billion crowns) for the current year. For 2026, the estimated net cash flow is projected to be around $51.6 billion (about 521 billion crowns).
Energy Minister Terje Aasland emphasized the importance of these revenues for financing Norway’s welfare state. He highlighted the ongoing global demand for oil and gas, stating, “The world and Europe will have a need for oil and gas for decades to come, and it is therefore crucial that Norway continue to develop the Norwegian continental shelf to persist as a stable and long-term supplier of energy.”
In addition, Aasland noted the government’s commitment to ensuring a stable and predictable regulatory framework, which is essential for maintaining high levels of exploration activity in the sector.
The coalition government, led by Prime Minister Jonas Gahr Støre, will require support from junior partners to pass this budget proposal in Parliament. As Norway navigates its fiscal strategy, the balance between funding welfare policies and ensuring sustainable growth from its oil revenues remains a critical focus for the administration.
The proposed budget reflects a broader strategy to secure Norway’s economic future while adapting to changing global energy demands. As discussions unfold in Parliament, the implications of this budget will be closely monitored by both domestic and international observers, given Norway’s significant role in the global energy market.
