{
  "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Norway",
  "publication": "IMF News, August 28, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/08/27/pr-25283-norway-imf-executive-board-concludes-2025-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Norway[1] and endorsed the staff appraisal without a meeting on a lapse-of-time basis[2] The authorities have consented to the publication of the Staff Report prepared for this consultation",
  "publishDate": "2025-08-28",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Executive Board completed the Article IV Consultation for Norway and endorsed the staff appraisal without a meeting on a lapse-of-time basis.\n- The authorities consented to publication of the Staff Report prepared for this consultation.\n- Main assessment: Norway’s economy is resilient and well positioned to face a more challenging external environment."
    },
    {
      "heading": "Economic Outlook and Projections",
      "content": "- Mainland real GDP is expected to pick up to 1.5 percent in 2025 and remain at around that level over the medium-term.\n- Under the baseline:\n  - Headline inflation is expected to decline to 2.2 percent by end-2025 and return to target by 2027.\n  - Core inflation is expected to decline to 2.6 percent by end-2025 and return to target by 2027.\n- Short-term and medium-term projections (selected):\n  - Real GDP (change in percent): 2023: 0.1; 2024: 2.1; 2025: 0.7; 2026: -1.7; 2027: 1.6; 2028: 1.3\n  - Real mainland GDP (change in percent): 2024: 0.6; 2025: 1.5; 2026: 1.4\n  - Unemployment rate (percent of labor force): 2023: 3.6; 2024: 4.0; 2025: 4.1; 2026: 4.2; 2027: 3.9; 2028: 3.8\n  - CPI (average): 2024: 5.5; 2025: 3.1\n  - Core Inflation (average): 2024: 6.2; 2025: 3.7; 2026: 3.0\n- Risks:\n  - Balance of risks to growth is tilted to the downside; risks to inflation are more balanced.\n  - Downside growth risks include global trade tensions, elevated household debt, and long-term demographic and structural challenges."
    },
    {
      "heading": "Inflation and Monetary Policy",
      "content": "- Bringing inflation sustainably back to target remains the most pressing near-term policy priority.\n- Norges Bank actions and stance:\n  - Began normalizing monetary policy in June 2025 by lowering the policy rate 25 bp to 4.25 percent and signaled further cuts ahead.\n  - Recommendation: Proceed cautiously with monetary policy normalization; current restrictive stance should remain until inflation is clearly on track to return to the 2 percent target.\n  - Suggested enhancements: expand use of scenario analysis, formalize a role for contrarian views in forecasting, and refine communication strategies including criteria for strategic communications when market expectations deviate markedly from policy intentions."
    },
    {
      "heading": "Fiscal Policy and Public Finance",
      "content": "- Government stance:\n  - The government’s fiscal stance has become increasingly expansionary; the 2025 budget delivers a significant fiscal impulse.\n  - Structural non-oil deficit is projected to reach about 13 percent of trend mainland GDP.\n  - Withdrawals from the Government Pension Fund Global remain below the 3 percent guideline.\n  - Government committed to gradually increasing defense spending toward 5 percent of GDP in line with NATO targets.\n- Executive Board guidance:\n  - A broadly neutral fiscal stance would support the disinflation process and improve policy coherence.\n  - Offsetting new spending priorities with savings elsewhere may be required to avoid fueling inflationary pressures.\n  - Enhancements to fiscal framework recommended:\n    - Reinforce countercyclicality of fiscal policy and spending discipline.\n    - Complement the fiscal rule with explicit medium-term expenditure limits.\n    - Strengthen multi-year budgeting, improve public investment management, conduct systematic spending reviews, and set efficiency targets.\n    - Benchmark and expand the mandate of the Advisory Panel on Fiscal Policy Analysis.\n- Fiscal projections and indicators (selected):\n  - Non-oil balance (percent of mainland GDP): 2023: -7.5; 2024: -8.2; 2025: -8.7; 2026: -9.1; 2027: -9.3; 2028: -9.5; 2029: -9.8; 2030: -10.0\n  - Structural non-oil balance (percent of mainland GDP): 2023: -9.4; 2024: -10.3; 2025: -12.9; 2026: -12.8\n  - Fiscal impulse: 2024: 0.4; 2025: 2.5\n  - In percent of Pension Fund Global Capital: 2023: -2.9; 2024: -2.7\n  - Overall balance (general government, percent of mainland GDP): 2023: 21.8; 2024: 17.0; 2025: 16.3; 2026: 13.5; 2027: 12.8; 2028: 12.3; 2029: 11.7; 2030: 10.9\n  - Net financial assets: 2023: 479; 2024: 557; 2025: 568; 2026: 572; 2027: 574; 2028: 575; 2029: 576\n  - Capital of Government Pension Fund Global (GPFG): 2023: 406; 2024: 487; 2025: 501; 2026: 507; 2027: 511; 2028: 515; 2029: 517; 2030: 519\n  - Gross Public Debt (percent of GDP): 2023: 44.2; 2024: 42.7; 2025: 42.5; 2026: 41.1; 2027: 39.8; 2028: 38.4; 2029: 37.0; 2030: 35.5"
    },
    {
      "heading": "Financial Stability and Macroprudential Policy",
      "content": "- Assessment:\n  - Financial system is sound with strong buffers, but vulnerabilities remain elevated.\n  - Continued close monitoring and priority on preserving capital buffers and contingency planning are essential.\n- Macroprudential guidance:\n  - Macroprudential policy settings should not be eased further.\n  - Easing should wait until systemic risks recede or financial disintermediation risks emerge.\n  - Current CCyB setting remains appropriate; Norges Bank should be prepared to raise it if cyclical vulnerabilities increase.\n  - Concerns noted about recent relaxation of the LTV limit for mortgages potentially increasing house prices and household indebtedness.\n- Financial sector actions and recommendations:\n  - Ensure bank models properly reflect credit risks.\n  - Strengthen contingency planning amid pressure on the commercial real estate (CRE) sector.\n  - Measures addressing increased bank reliance on covered bonds are welcome to mitigate interconnectedness risks.\n  - Participation in a Nordic-Baltic regional stress test exercise recommended.\n  - Continue work addressing findings of the 2024 Nordic-Baltic crisis management exercise and 2020 FSAP recommendations."
    },
    {
      "heading": "Structural Reforms and Long-term Policies",
      "content": "- Priority reform areas:\n  - Advance the “reinforced work line” agenda to reduce reliance on disability benefits, raise labor force participation among underrepresented groups (including youth and immigrants), and increase total hours worked.\n  - Strengthen education-to-work transitions, promote full-time employment, and accelerate digitalization to support productivity.\n  - Further measures needed to achieve Norway’s 2035 emission reduction targets.\n- Fiscal and tax reform recommendations:\n  - Tax reforms to improve efficiency and broaden the revenue base, including consolidating multiple VAT rates and enhancing incentives for work and investment.\n  - Further reforms to disability and sickness benefits to reduce work disincentives, increase labor force participation, and contain long-term fiscal costs.\n- Implementation guidance:\n  - Sustained reform efforts are crucial to ensure long-term sustainability of fiscal policy in the face of rising structural spending pressures."
    },
    {
      "heading": "Key Statistics and Memo Items",
      "content": "- Population (2024): 5.6 million\n- Per capita GDP (2024): US$ 86,611\n- Main products and exports: Oil, natural gas, fish (primarily salmon)\n- Selected table entries (rounded to source precision where provided):\n  - International reserves (end of period, in billions of US dollars): 77.4 (2023); 82.4 (2024)\n  - Gross national saving (percent of mainland GDP): 2023: 41.6; 2024: 40.8; 2025: 38.8; 2026: 38.3; 2027: 37.8; 2028: 37.1; 2029: 36.3; 2030: 35.6\n  - Gross domestic investment (percent of mainland GDP): 24.3 (2023); 24.1 (2024); 24.0 (2025); 24.2 (2026)\n  - Nominal GDP (in Billions of US Dollars): 2023: 482.9; 2024: 83.6; 2025: 515.5; 2026: 546.9; 2027: 566.2; 2028: 584.2; 2029: 603.1; 2030: 623.3\n  - Terms of trade (change in percent): 2023: -29.3; 2024: -6.1; 2025: -4.9; 2026: -0.4\n  - Balance of goods and services (percent of mainland GDP): 2023: 20.3; 2024: 17.5; 2025: 16.1; 2026: 15.7; 2027: 15.2; 2028: 14.7; 2029: 14.2; 2030: 13.7\n- Projection basis: Based on information available as of July 1, 2025.\n\nIMF Executive Board Concludes 2025 Article IV Consultation with Norway — Press Release No. 25/283\n\n---\n\n\n References\n\n- Norway and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- www.imf.org/Norway\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/08/27/pr-25283-norway-imf-executive-board-concludes-2025-article-iv-consultation"
    }
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    "Published: August 28, 2025",
    "The Executive Board completed the Article IV Consultation for Norway and endorsed the staff appraisal without a meeting on a lapse-of-time basis.",
    "The authorities consented to publication of the Staff Report prepared for this consultation.",
    "Main assessment: Norway’s economy is resilient and well positioned to face a more challenging external environment.",
    "Mainland real GDP is expected to pick up to 1.5 percent in 2025 and remain at around that level over the medium-term.",
    "Under the baseline:",
    "Short-term and medium-term projections (selected):",
    "Risks:",
    "Bringing inflation sustainably back to target remains the most pressing near-term policy priority.",
    "Norges Bank actions and stance:",
    "Government stance:",
    "Executive Board guidance:",
    "Fiscal projections and indicators (selected):",
    "Assessment:",
    "Macroprudential guidance:",
    "Financial sector actions and recommendations:",
    "Priority reform areas:",
    "Fiscal and tax reform recommendations:",
    "Implementation guidance:",
    "Population (2024): 5.6 million",
    "Per capita GDP (2024): US$ 86,611",
    "Main products and exports: Oil, natural gas, fish (primarily salmon)",
    "Selected table entries (rounded to source precision where provided):",
    "Projection basis: Based on information available as of July 1, 2025.",
    "[Norway and the IMF](http://www.imf.org/external/country/NOR/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[www.imf.org/Norway](https://www.imf.org/en/Countries/NOR)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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