Norway: Selected Issues

International Monetary Fund

No 2025/249, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper focuses on Norway’s fiscal framework. The paper examines measures required to strengthen expenditure efficiency and countercyclicality. Norway has benefited significantly from its current fiscal framework, which has steadily transformed oil revenues into long-term financial assets and has allowed the government to stabilize the economy amid severe shocks. Norway’s fiscal framework should be enhanced to better address increasing and procyclical spending trends, while maintaining fiscal sustainability. The analysis suggests that, while the current fiscal rule served Norway well, the resilience of its fiscal framework could be strengthened to better respond to evolving fiscal challenges. Revising the 3-percent rule alone would only partially address concerns around spending efficiency, fiscal procyclicality, and the volatility of Government Pension Fund Global returns. Recent refinements to Norway’s fiscal framework reflect a recognition of asymmetric risks to fiscal sustainability. Strengthening the fiscal framework through an expenditure-based operational anchor can enhance resilience, efficiency, and sustainability.

Keywords: expenditure rule; EU expenditure; strengthening expenditure efficiency; legacy EU fiscal rule; GPFG value volatility; Fiscal rules; Fiscal governance; Expenditure efficiency; Fiscal stance; Global (search for similar items in EconPapers)
Pages: 31
Date: 2025-08-28
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