Norway's overall cost of asylum seekers is now seen rising by 9.5 billion crowns in 2016
* Based on assumption that 33,000 people will seek asylum
* Says as many as 120,000 people could apply in 2016
* 2016 non-structural oil deficit now NOK 195.2 bln (Adds detail)
OSLO, Oct 30 (Reuters) - Norway on Friday raised its 2016 fiscal spending forecast and rolled back some of its planned tax cuts to pay for a record increase in asylum seekers, the government said.
Its original budget for next year, published on Oct. 7, had not taken into account the sharp rise in the number of people seeking to escape wars in Syria, Afghanistan and other conflicts, it added in a statement.
Norway now expects a structural non-oil deficit of 195.2 billion Norwegian crowns ($22.82 billion) in 2016, up from 194 billion seen in the initial budget three weeks ago.
The overall cost of asylum seekers is now seen rising by 9.5 billion crowns in 2016. Some 1.2 billion crowns will be taken from the country's vast oil fund, 2.2 billion would come from making smaller tax cuts, while the rest would be redistributed money from other parts of the budget.
The government earlier said asylum applications in 2015 were likely to triple to a range of 30,000-35,000 people. In 2016, it anticipates that about 33,000 migrants will apply, with 30,000-50,000 seen as the most likely range.
The hard-to-forecast number of applications could however rise as high as 120,000 people in 2016, the statement said.
Over 680,000 asylum seekers from the Middle East, Africa and Asia have poured into Europe this year, causing the continent's biggest migration crisis since World War Two with countries arguing over how best to share the burden.
"Norway will pursue a strict, but fair asylum policy. A review of rules and routines must be conducted with a focus on reducing costs per asylum seeker and the flow of new asylum seekers," Finance Minister Siv Jensen said.
Jensen is the leader of the anti-immigration Progress Party, which is part of Oslo's minority government coalition along with the centre-right Conservatives.
The fiscal budget's underlying spending growth, a key indicator of public expenditures, is seen rising to 2.9 percent in 2016 from an original estimate of 2.6 percent. (Reporting by Camilla Knudsen; Writing by Terje Solsvik; Editing by Gwladys Fouche and Mark Heinrich)
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