Norway achieves high overall compliance with international standards and codes, with a score of 65.83 out of 100 in our Standards Compliance Index. Norway's compliance in the area of macroeconomic fundamentals and financial supervision is high. However, its performance in the area of market infrastructure is mixed. Its already comprehensive anti-money laundering regime has been further strengthened by a 2004 anti-money laundering law, and Norway fulfills all the requirements for effective payment systems as a member of the European Economic Area. Norway is following the European Union's approach on international auditing and accounting standards. The 2004 Code of Practice for Corporate Governance has made Norway's corporate governance regime sound, but the Code's implementation has not yet been assessed. Further, Norway's compliance in the insolvency framework area lacks an independent assessment.

Macroeconomic Policy and Data Transparency

Norway has subscribed to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS) since June 1968 and complies with SDDS coverage, timeliness, and periodicity specifications. In two cases (general government and central government operations) it avails itself of the timeliness flexibility option, and it takes the periodicity flexibility option for central government operations as well. Norway makes advance release calendars available for all relevant datasets and the 2007 IMF Article IV Consultation found the data to be adequate for surveillance purposes. The IMF's 2003 Report on the Observance of Standards and Codes noted that Norway's statistical agencies are aware of the importance of data quality, and added that all data is publicly accessible, along with explanatory materials regarding methodology and sources. More »

According to the International Monetary Fund's (IMF's) 2005 Financial Sector Assessment Program (FSAP), Norway's conduct of monetary policy is transparent. The central bank of Norway, Norges Bank (NB) publishes a variety of documents relevant to the monetary policy process, from compilation of data to policy formulation and implementation. These include the Annual Report, the Monetary Policy Report, and the Financial Stability Report (all annual), as well as Working Papers generated from the research done by the NB statistics department, Economic Bulletins, and a variety of statistical documents. These materials are readily accessible to the public on the NB website. In addition, the NB website provides webcasts of the press conferences held following each of the central bank's executive board meetings. More »

According to the International Monetary Fund's (IMF) 2005 Financial Sector Assessment Program (FSAP), Norway's fiscal policy framework is generally "prudent" and "transparent," and helps to maintain financial stability. Contributing to this stability is the Government Petroleum Fund (GPF, established in 1990), which is used to help insulate the Norwegian economy from wide fluctuations in oil prices. The IMF's 2007 Article IV Consultation report noted that an explicit medium-term fiscal framework would help to focus policy more on medium-term considerations. Norway already has many parts of such a framework in place, especially the fiscal guidelines and the finance ministry's multi-year budget projections. As a subscriber to the IMF's Special Data Dissemination Standard (SDDS) since 1996, Norway observes all SDDS requirements for timeliness, coverage, and periodicity in the data it provides. The 2006 Open Budget Index report for Norway, compiled by Dag Aames, rates Norway's budget process as "substantially open," providing the public with all but one of its recommended budget documents, and including a great deal of important budget information. However, the Aames report suggests that there remains some room for improvement. More »

Institutional and market infrastructure

According to PricewaterhouseCoopers (PWC) 2005 report, Norway's primary insolvency legislation comprises the Act on Debt Arrangements and Bankruptcy and the Creditors Recovery Act, passed in 1984 and effective since 1986. Norway's formal insolvency procedures include voluntary composition, compulsory composition, and actual bankruptcy, involving the liquidation of the debtor's assets. The laws treat both individual and corporate bankruptcy under the same provisions, but in the case of corporate bankruptcy the board of directors stands in the position of the individual debtor. According to the PWC report, the major shortcoming of the Norwegian insolvency regime is the fact that the company facing bankruptcy is responsible for covering the cost of its insolvency proceedings. As a result, even when voluntary or compulsory compositions are undertaken, they often become simple liquidations, and proceedings are often cut short due to insufficient funds. A further problem is that the application of the law is inflexible, so that there is no procedural distinction between the restructuring needs of a large enterprise versus those of a small company. In 2000, the Norway's insolvency legislation was revised in an effort to make it easier to pursue a business rescue option and to extend protection to unsecured creditors. The PWC report suggests that the revisions have achieved only limited success. There is insufficient publicly available information regarding Norway's compliance with the World Bank's Principles and Guidelines for Effective Insolvency and Creditor Rights Systems. More »

Norway is a European Economic Area (EEA) member and therefore adheres to European Commission (EC) regulations. In line with the EC regulation No. 1606/2002, listed companies in Norway are required to use International Financial Reporting Standards (IFRSs) in their consolidated accounts. The 2006 EC report on the implementation of the Regulation No. 1606/2002 points out that Norway permits IFRSs in the annual accounts for listed companies and annual and consolidated accounts for all other companies. Per the 2007 publication by the Financial Supervisory Authority of Norway (FSAN), as of February 2007, IFRSs are not allowed to be applied by financial institutions and investment firms, which are required to follow rules set by the FSAN. However, the FSAN notes that the Ministry of Finance is considering bringing reporting requirements for financial institutions in line with IFRSs. Other companies which choose not to apply IFRSs follow Norwegian accounting standards set by the Norwegian Accounting Standards Board. Although the International Monetary Fund's (IMF) 2005 country report on Norway notes that accounting, auditing, and actuarial standards are "well developed" and in line with EU directives and international best practices, there is insufficient publicly available information that specifically addresses conformity of Norwegian standards with IFRSs. More »

According to the 2005 International Monetary Fund (IMF) Financial System Stability Assessment (FSSA), Norway has a sound corporate governance regime which is governed by provisions contained in primary legislation, secondary legislation, and a comply-or-explain approach to the Code of Practice for Corporate Governance, most recently updated in 2006. The IMF's assessment team found that the enforcement of corporate governance in Norway is sufficient to provide the financial sector with financial integrity. However, a more specific assessment of Norway's compliance with the Organization for Economic Cooperation and Development's Principles of Corporate Governance is not publicly available, thereby preventing Norway from achieving a potentially higher level of compliance with this standard. More »

The International Monetary Fund's 2005 Financial Systems Stability Assessment on Norway noted that accounting, auditing, and actuarial standards were "well developed" and in line with international standards and best practices. According to the Norwegian Institute of Public Accountants' self-assessment prepared as part of International Federation of Accountants Member Body Compliance Program, International Standards on Auditing (ISAs) are adopted as Norwegian auditing standards (RSs) although with adaptations to reflect the local legal environment. Differences with the International Auditing and Assurance Board standards are described in the Preface to RSs. On May 17, 2006, Directive 2006/43/EC of the European Parliament and the Council came into force, requiring all statutory audits to be carried out on the basis of ISAs as adopted by the European Commission (EC). European Union member states shall adopt and publish the provisions necessary to comply with this Directive before June 29, 2008. Member states are allowed to impose additional requirements relating to the statutory audits of annual and consolidated accounts for periods expiring on June 29, 2010. Norway is a European Economic Area member and as such must adhere to the EC regulations. More »

According to the Financial Action Task Force's (FATF) Third Mutual Evaluation Report for Norway on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) released in June 2005, Norway is fully compliant with 13 FATF Recommendations, largely compliant with 15 Recommendations and 3 Special Recommendations, partially compliant with 8 Recommendations and 4 Special Recommendation, and non compliant with 2 Recommendations and 2 Special Recommendations. The other two recommendations (Recommendation 9 pertaining to third parties and introduced business, and Recommendation 34 pertaining to legal arrangements - beneficial ownership, and control information) are not applicable in the Norwegian context. The Norwegian Penal Code criminalizes both money laundering and terrorist financing. The 2003 Money Laundering Act has further strengthened the AML/CFT regulatory framework in Norway. The Money Laundering Team (MLT), which is housed in the National Authority for Investigation and Prosecution of Economic and Environmental Crime (ØKOKRIM), is Norway's financial intelligence unit (FIU). The 2006 annual report by ØKOKRIM indicates, however, that the FIU does not go by the name of Money Laundering Team anymore. The 2006 Financial Supervisory Authority of Norway (FSAN) annual report states that the FSAN supervises institutions' compliance with the Norwegian Money Laundering Act of 2003, and prioritizes supervision in line with the FATF recommendations. The FSAN report titled "Strategy 2006-2010" attests that the FSAN AML/CFT supervisory rules are in line with the European Union requirements as well as international best practices. Further, the 2006 annual report of the ØKOKRIM states that the 2006 budget of Norway allocated additional funds to the ØKOKRIM to enhance its AML efforts. The ØKOKRIM hopes that these steps will revamp its intelligence and investigative powers and arrangements and alleviate the inadequacies of equipment, analytical tools, and financing in the FIU that were identified by the FATF report. More »

According to the International Monetary Fund's (IMF) 2005 Financial System Stability Assessment (FSSA), the Norwegian systemically important payment system, Norges Bank's settlement system (NBO) is a real-time gross settlement system and is fully compliant with all the ten Core Principles for Systemically Important Payment Systems (CPSIPS) promulgated by the Committee on Payment and Settlement Systems. The 2006 Norges Bank's (NB) Annual Report on Payment Systems also assessed the three settlement systems in Norway supervised by the NB -- the NBO, the Norwegian Interbank Clearing System (NICS) and the DnB NOR Bank ASA's (DnB NOR) interbank system and concluded that they all met international standards, with very minor shortcomings. Per the 2005 FSSA, the oversight of payment systems in Norway is generally sound, and the law bestows on the NB the responsibility of oversight of payment systems in Norway. Also, the NB has the requisite resources and tools to carry out this role. However, the FSSA calls for transparency in oversight and recommends that the NB's Payment System Department be charged with monitoring the NBO's compliance with the CPSIPS. It also recommends that the rules governing payment systems supervision be codified and published on the NB's website. The NB has responded to these recommendations, as is evident from its 2006 Annual Report, according to which the oversight responsibility of the NB is spelled out in Section 1 of the Norges Bank Act. The bank's Annual Report adds that the NB's role as the supervisor of payment systems is to ensure that systems follow the ten CPSIPS. The same report also states that the NB is in the process of implementing a new settlement system to be named the New Interbank Settlement System (nytt interbank oppgjørssystem, or NIBO) to replace the NBO, and address concerns of potential operational risks in the aging NBO. More »

Financial Regulation and Supervision

According to the International Monetary Fund's (IMF) 2007 Article IV consultation report, the Norwegian financial sector is sound and well supervised and banks are well-capitalized and profitable. The Financial Supervisory Authority of Norway (FSAN) is responsible for banking supervision. The 2005 IMF Financial System Stability Assessment (FSSA) notes that Norway's banking supervisory framework has the required legal authority. It adds that the FSAN is a competent agency with a sound record of integrity of operations and the capacity to conduct effective bank supervision closely in line with European Union (EU) norms. The IMF's 2005 report further notes that Norway's prudential regulations are largely aligned with the Basel Core Principles (BCPs) for Effective Banking Supervision. Commenting in 2006 on the results of the FSSA, the FSAN mentions that Norway has a strong supervisory regime with a proper legal basis and clearly identifiable goals. The 2007 IMF Article IV report observes that Norway has implemented the recommendations of the 2005 FSSA pertaining to supervisory cooperation between the financial regulators, and cross border coordination and contingency planning. The 2007 report recommends that Norway improve the operational independence of the FSAN. This may not take place, however, because the FSAN is an administrative agency within the Ministry of Finance, which in turn is accountable to the legislature for the actions and decisions of the FSAN under Norway's parliamentary system. The IMF also adds that Norway is a part of the European Economic Area, and therefore falls into the European framework of cross border regulation and supervisory cooperation. More »

According to the 2005 International Monetary Fund (IMF) Financial Sector Assessment Program (FSAP), Norway's securities regulations are comprehensive and in line with international standards. Supervision is substantial and comprehensive, carried out by the staff of the Financial Supervisory Authority of Norway (FSAN), which is highly qualified. The supervisory procedures are transparent in the judgment of the IMF assessment team. As a member of the European Economic Area, Norway is required to implement EU financial services Directives and is therefore continuously upgrading its regulatory and supervisory framework. A detailed assessment of Norway's compliance with the International Organization of Securities Commissions' (IOSCO) principles would be desirable to confirm these positive findings. More »

According to the 2007 Article IV consultation report by the International Monetary Fund (IMF), the Norwegian financial sector -- including the banking, securities, and insurance sectors -- is healthy and well supervised, a statement also present in the 2005 IMF Financial System Stability Assessment (FSSA) report. The 2005 FSSA report also finds financial sector supervision to be effective and closely aligned with European Union (EU) regulations. The Financial Supervisory Authority of Norway (FSAN) is responsible for insurance supervision, and shares the responsibility of financial stability with the Norges Bank and the Ministry of Finance. The 2005 FSSA states that, as a member of the European Economic Area, Norway is required to implement EU Directives and is therefore continuously upgrading financial sector regulation and supervision. Further, the insurance and pensions sectors are profitable, but they remain vulnerable to market fluctuations. The 2005 FSSA makes certain recommendations concerning the FSAN's supervisory authority, the supervisory process, suitability of persons, investments, consumer protection and anti-money laundering. It also recommends continuous and diligent oversight of the risk management challenges faced by the insurance and pensions sector. The IMF's 2005 FSSA notes that these recommendations will improve Norway's compliance with international best practice. However, there is no detailed assessment publicly available as to Norway's compliance with individual Insurance Core Principles (ICPs) promulgated by the International Association of Insurance Supervisors (IAIS). More »

Legend:

Credit Ratings

Moody's Aaa/Stable

Fitch AAA/Stable

Standard & Poor's AAA/Stable

Macroeconomic Data

2007 GDP (Current Prices): 391.498 billion USD (IMF)

2007 GDP (Per Capita): 83,922 USD (IMF)

2008 GDP (Growth Forecast): 3.1% (IMF)

2008 Inflation (CPI): 3.1% (IMF)

2007 Unemployment: 2.4% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 5.906 billion USD (UNCTAD)

FDI (Outward): 10.321 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): N/A million USD (OECD)

ODA (Disbursed): 2,954 million USD (OECD)