Norway boosts Ukraine aid as defense, ecology budgets surge
The Norwegian government's budget conference garners nearly the same level of interest as the country's World Championships. This time, the main priorities include supporting Ukraine, making decisions regarding the potential use of the oil fund, and addressing issues of defense and ecology.
This year's Norwegian government budget conference took place at a hotel near Oslo. The informal atmosphere of the discussions and the suburban location are long-standing traditions.
Support for Ukraine increased from 35 billion kroner (approximately 4.5 billion CAD) to 85 billion kroner (approximately 11 billion CAD) in 2025, a record amount. This money will be allocated to humanitarian and military goals. Prime Minister Jonas Gahr Støre announced consultations with European leaders and Ukraine's President, Volodymyr Zelenskyy, on the disbursement of these funds.
Key budget decisions: support for Ukraine and defense
The decision regarding Ukraine was directly related to the policy of using Norway's oil fund. Norway has the world's most significant state investment fund, exceeding 2.5 trillion CAD.
In the 2025 budget, the total value of funds transferred from the fund is estimated to be around 420 billion kroner (approximately 55 billion CAD), which accounts for 2.9 percent of its value. This narrowly stays below the maximum limit of 3 percent set by the "Handlingsregelen," a rule that generates much excitement every year.
The funds will also be sufficient to strengthen the Norwegian Armed Forces. The defense budget is set to increase by 25 percent compared to 2024, reaching 125 billion kroner (approximately 16 billion CAD). These funds will be used for the purchase of modern military equipment, modernization of the air force base, and strengthening cooperation with NATO.
Handlingsregelen – a rule that safeguards future generations
The oil fund provides financial security for Norway and is also subject to strict regulations. In 2001, the government of Jens Stoltenberg implemented the "Handlingsregelen" ("action rule"), which determines the maximum amount the state can spend from the fund within a year. The limit is, as noted above, 3 percent of the total value of the fund and is strictly adhered to. Exceeding it during the pandemic faced significant public opposition.
This policy ensures that the oil fund continues growing rather than gradually depleting. Since 2015, its value has nearly doubled from approximately 1.3 trillion CAD to 2.5 trillion CAD. At the same time, the government maintains a low level of public debt, which in 2024 amounted to only 40 percent of GDP, one of the best ratios in Europe.
Transparent budget process
Norway's budgeting system is based on transparency and long-term planning. After two days of government discussions, a parliamentary debate and interdepartmental consultations follow. Unlike other European countries, Norway does not engage in aggressive budget spending. Its policy is based on cautious economic forecasts.
As a result, the budget deficit in 2025 is expected to be only 2.1 percent of GDP, a better outcome than most EU countries.
The government also announced increased spending on the green transition. The budget for ecological projects will increase by 18 percent compared to the previous year, reaching 55 billion kroner (approximately 7 billion CAD).
Sweaters and busserulls – the tradition of the budget conference
In addition to serious financial decisions, the budget conference has a social and symbolic dimension. Government members traditionally attend wearing characteristic clothing. The Prime Minister of Norway, Jonas Gahr Støre, published a photo on Facebook of government members wearing wool sweaters known as "lusekofte" and "setesdalskofte."
In the 1990s, navy blue work shirts called "busserulls" with folk accents were equally popular. This tradition of budget conferences dates back to the 1970s. Gro Harlem Brundtland, a three-time Prime Minister of Norway, attempted to change it for several years, but the custom endured. It symbolizes the government's closeness to citizens and highlights restraint in managing the budget of one of the world's wealthiest countries.
Norway's budget – more than financial decisions
For Norwegians, budget agreements are not only a time for strategic decisions but also a time for entertainment, as they allow them to interpret government signals. They also have the opportunity to see politicians' attire as a manifestation of national identity and pragmatism. Norwegians like to remind themselves each year how attached they are to their conservative, long-term strategy for building a common wealth.
