Norway boosts Ukraine aid and defense in landmark budget

This year's Norwegian government budget conference occurred at a hotel near Oslo. The informal atmosphere of the discussions and the suburban location have become a permanent tradition.

Support for Ukraine increased from 35 billion kroner (approximately 3.3 billion USD) to 85 billion kroner (approximately 8 billion USD) in 2025. This is a record amount earmarked for both humanitarian and military purposes. Prime Minister Jonas Gahr Støre announced consultations with European leaders and Ukraine's president, Volodymyr Zelensky, on disbursing these funds.

The decision regarding Ukraine is directly linked to Norway's policy of using its oil fund. Norway has the world's most significant state investment fund, exceeding 1.8 trillion USD.

The total amount of funds transferred from the fund in the 2025 budget is estimated to be around 420 billion kroner (approximately 39.4 billion USD), which accounts for 2.9% of its value. According to the "Handlingsregelen," this stays narrowly below the maximum limit of 3%, a rule that generates much excitement every year.

The funds will also be used to bolster the Norwegian Armed Forces. The defense budget is set to increase by 25% compared to 2024, reaching 125 billion kroner. These funds will be utilized to purchase military equipment, modernize the air force base, and strengthen NATO cooperation.

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"), determining the maximum amount the state can spend from the fund annually. The limit, as mentioned earlier, is 3% of the fund's total value and is strictly adhered to. Exceeding it during the pandemic faced significant public opposition.

This policy ensures that the oil fund grows rather than depletes. Since 2015, its value has nearly doubled from approximately 950 billion USD to 1.8 trillion USD. Simultaneously, the government maintains a low level of public debt, which 2024 amounted to only 40% of GDP, one of the best results in Europe.

Norway's budgeting system is rooted in transparency and long-term planning. After two days of government discussions, parliamentary debates and interdepartmental consultations ensue, unlike other European countries, Norway does not engage in aggressive budget spending but relies on cautious economic forecasts.

As a result, the budget deficit in 2025 is expected to be only 2.1% of GDP, a better result than most EU countries.

The government also announced increased spending on the green transition. The budget for ecological projects will rise by 18% compared to the previous year, reaching 55 billion kroner.

In addition to making serious financial decisions, the budget conference also has a social and symbolic dimension. Government members traditionally attend wearing characteristic attire. The Prime Minister of Norway, Jonas Gahr Støre, shared a photo on Facebook of government members in wool sweaters known as "lusekofte" and "setesdalskofte."

Navy blue work shirts called "busserulls," with folk accents, were equally popular in the 1990s. This tradition at the budget conference 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 prevailed. It symbolizes the government's closeness to citizens and highlights the restraint in managing the budget of one of the world's wealthiest countries.

For Norwegians, budget negotiations provide not only an opportunity for strategic decisions but also a chance to entertain themselves by interpreting government signals. Seeing politicians' attire manifests national identity and pragmatism. Every year, Norwegians affirm their commitment to a conservative, long-term strategy for building common wealth.