Rating action

Scope Ratings GmbH (Scope) has today affirmed the Kingdom of Norway’s (Norway) long-term issuer and senior unsecured debt ratings at AAA in both local and foreign currency and maintained the Stable Outlook. Scope has also affirmed the short-term issuer rating at S-1+ in both local and foreign currency. As per Rating Definitions updated in December 2025, outlooks are not assigned to short-term ratings; hence the Stable Outlook for Norway’s S-1+ short term rating has been withdrawn (irrelevant rating category).

The affirmation of Norway’s credit ratings reflects the country’s economic resilience and the expectation of sustained overall general government fiscal surpluses over coming years. In addition, Norway has one of the world’s highest per-capita income levels and benefits from low central government debt, issued only to finance capital expenditure. The significant net public asset position, driven by savings accumulated through its sovereign wealth fund, the Government Pension Fund Global (GPFG, or the Fund), is an additional significant credit strength. Moreover, strong fiscal, monetary and financial governance institutions further support the ratings.

The main credit challenges relate to i) high household debt and imbalances in the real-estate sector and ii) long-term transition risks from reducing commodity dependence and shifting toward a more diversified economic structure.

For the updated rating report, click here.

Key rating drivers

Resilient economic performance. Economic output in Norway has proven resilient in recent years despite the headwinds stemming from high inflation and interest rates. The slowdown in domestic private consumption and investments, particularly in the housing sector, was only partially offset by strong public consumption, exports, and petroleum investments, resulting in subdued mainland GDP growth of 0.7% in 2023 and 0.6% in 2024¹. Throughout 2025, the CPI inflation rate remained above target at around 3%, resulting in only a gradual easing of monetary policy, with Norges Bank leaving the policy rate at 4% in December 2025. Still, strong growth in real wages boosted household consumption, and housing investments started to recover from low levels. The labour market continues to show resilience, with a robust employment rate at 69.6% on average last year. The unemployment rate averaged 4.5% last year, moderately increasing from 4% in 2024, partly reflecting an increase in the number of job seekers.

Higher US tariffs appear so far to have had little impact on economic activity in Norway, helped by the limited trade links with the US, which accounted for 3% of total Norwegian exports over the past five years². However, global trade uncertainty and geopolitical risks remain elevated.

Scope estimates total real GDP growth to have reached 1.4% in 2025 and projects it to expand by 1.3% in 2026 and 1.1% in 2027. Strong real wage growth, continued easing inflationary pressures, together with solid public and private consumption, will continue to support economic activity, while investments in the petroleum sector are set to gradually decline in the medium term.

Strong public finances, supported by GPFG. Under Norway’s fiscal framework, fiscal revenues from the petroleum sector are transferred to the GPFG, and transfers from the Fund should over time equal the long-term real return of the Fund, currently estimated at 3%. The 2026 Budget envisages a structural non-oil deficit of NOK 584bn, corresponding to 2.8% of the GPFG’s value. Main measures outlined in the budget include household support for electricity prices, additional transfers to the municipal sector, contributions to the National Insurance Scheme, continued military support for Ukraine and an increase in national defence spending. For military spending, in particular, the government plans a NOK 4.2bn increase this year, which would result in defence spending of 3.4% of GDP, broadly in line with the 2025 level³. Nevertheless, overall headline fiscal balances, including the oil sector, are expected to remain in surplus of around 10% of GDP on average over 2025-2030, although on a declining trajectory, from an estimated 11.9% of GDP in 2025 to 8% by 2030. As a result, Scope expects the debt-to-GDP ratio to increase from 42.7% in 2024 to 43.5% in 2025, before declining marginally to 42.6% in 2026 and remaining around 42% in the medium term.

Large net public asset position driven by savings accumulated through the sovereign wealth fund. Norway benefits from a significant net public asset position as a result of the savings accumulated through the GPFG over the past decades. Net financial assets reached a record high of 431% of GDP in Q3 2025, increasing from 370% of GDP in Q1 2025, marking by far the highest net public asset ratio among AAA-rated peers. Since its launch in 1990, the GPFG has grown to about USD 1.9trn as of the first half of 2025, or around 467% of 2024 mainland GDP.

Fund assets are invested abroad, and the divestment of oil and gas shares in recent years has helped diversify the country’s wealth away from the sector. The prudent investment of Norway’s oil and gas wealth, combined with the fiscal rule targeting annual transfers to the budget of no more than 3% of GPFG assets, is a significant credit strength. Compared to end-2024, the Fund’s market value decreased by NOK 156bn, mostly due to the strong appreciation of the krone (NOK 1,010)⁴. Using the Fund to delink the generation and use of petroleum revenues bolsters fiscal and economic sustainability. At the same time, it provides a formidable tool for business cycle smoothing, eases the effects of oil price volatility on the mainland economy, decreases the potential for short-term overspending and provides the foundation for long-term investments to benefit future generations.

Rating challenges: high household debt and imbalances in the real estate sector, and challenges concerning the long-run transition to a non-commodity-dependent economy

Norwegian banking sector resilience is supported by solid profitability, comfortable capital buffers, a systemic risk buffer at 4.5% and a countercyclical risk buffer at 2.5%, one of the highest rates in Europe. Despite these positive factors, elevated household debt and large exposure to the real estate sector leave the financial system vulnerable to adverse shocks amid high interest rates and an uncertain macroeconomic environment.

Banking exposure to real estate activities accounted for 44% of total corporate lending as of end-June 2025⁵. CRE companies, in particular, tend to have higher leverage than other firms and higher refinancing risks due to the short maturities of new commercial property mortgages. Losses in this sector could therefore result in material negative impacts on banks’ balance sheets and cause substantial downturns in the financial market. However, rental income is currently increasing, helping most firms to cover expenses with current earnings.

Real estate sector risks are intertwined with high levels of household debt, mostly consisting of mortgage loans. Since December 2024 the maximum loan-to-value ratio has been set at 90%, up from the previous 85%, to encourage private borrowing and foster activity in the construction sector. Nevertheless, while remaining elevated, total household debt has increased less than income in recent years, leading to a broad decline in the debt-to-income (DTI) ratio among households, especially for those with the highest ratios⁶. The household debt ratio peaked at 251% of disposable income in Q4 2023 before starting to decline gradually to 207% as of Q3 2025. While the level remains elevated, the decline helps to reduce vulnerability to high interest rates and economic downturns. The combination of high interest rates and a large share of Norwegian households with floating rate mortgages, caused the interest burden to rise from 4.0% of disposable income on average in 2021 to a peak of 8.9% in Q2 2024, before declining marginally to 8.4% in Q2 2025. Similarly, the debt service ratio rose sharply from around 15% in 2021 to around 21% as of Q2 2025.

In the housing market, prices have increased steadily over the past two years despite the rise in interest rates, with annual growth peaking at 7.5% in February 2025. Since then, house price growth has started to decelerate, reaching 5% YoY in December 2025, although remaining 33% above pre-Covid levels. Strong household income growth and labour market conditions will sustain housing demand, likely fuelling further increases in house prices. Price growth is expected to exceed wage growth, reinforced by lower interest rates and limited additions to housing supply.

Finally, Norway remains highly reliant on the oil and gas sector, exposing it to long-term transition challenges such as stranded asset risks, as its main trading partners gradually transition away from fossil fuels. However, the decision to continue oil exploration is strongly supported by EU member states, which have strengthened energy cooperation with Norway. As one of the main alternative energy suppliers to Russia, Norway’s share of natural gas imports to the EU has steadily improved over the past years, from 24% in 2021 to almost 52% in Q3 2025. The decision to divest companies solely dedicated to oil and gas exploration and production from the GPFG’s benchmark index also helps diversify the country’s wealth away from the sector. While Norway’s role as a key energy supplier to Europe supports its external position in the near term, its continued reliance on fossil fuels underscores the importance of managing long-term transition risks and aligning wealth diversification with global decarbonisation trends.

Rating-change drivers

The Stable Outlook reflects Scope’s view that the risks Norway faces over the next 12 to 18 months are balanced.

Downside scenarios for the ratings and Outlooks are if (individually or collectively):

1. Macroeconomic policy weakened significantly, threatening Norway’s long-run net public and external asset positions; and/or
    
2. A financial crisis, potentially exacerbated by domestic imbalances, materially damaged Norway’s public sector and financial system balance sheets.

Sovereign Quantitative Model (SQM) and Qualitative Scorecard (QS)

Scope’s SQM, which assesses core sovereign credit fundamentals, signals a first indicative credit rating of ‘aaa’ for Norway. Under Scope’s methodology, this initial indicative rating receives: i) no further adjustment from the methodological reserve-currency adjustment; and ii) no negative adjustment from the methodological political-risk quantitative adjustment. On such a basis, a final SQM quantitative rating of ‘aaa’ is assigned for Norway and reviewed by the Qualitative Scorecard (QS) where this rating can be adjusted by up to three notches up or down depending on the significance of Norway’s qualitative credit strengths or weaknesses compared against an SQM-assigned peer group of sovereigns.

Scope identified the following relative credit strengths of Norway via the QS: i) monetary policy framework; ii) fiscal policy framework; iii) long-term debt trajectory; iv) debt profile and market access; v) strong resilience to short-term external shocks; vi) low social risks; and vii) low governance risks. No relative credit weaknesses were identified. On aggregate, the QS generates a one-notch positive adjustment for Norway’s credit rating, concluding in final AAA long-term issuer ratings.

A rating committee has discussed and confirmed these results.

Environment, social and governance (ESG) factors

Scope explicitly factors in ESG issues in its ratings process via the sovereign-rating methodology’s stand-alone ESG sovereign-risk pillar, which holds a significant 25% weight under the quantitative model (SQM) and 20% weight under the methodology’s qualitative overlay (QS).

Environmental factors are explicitly considered in the rating process via the environment sub-category under the ESG risk pillar. Norway receives high scores in the SQM indicators measuring CO2 emissions per GDP, the exposure and vulnerability to natural disaster risks, and the ecological footprint of consumption compared with available biocapacity. In line with other advanced economies, the country receives a low score on the SQM indicator measuring greenhouse gas (GHG) emissions per capita. Norway aims to reach climate neutrality by 2050, when the sovereign’s wealth fund should also have a net zero emissions portfolio. In the 2026 Budget, the government proposed to increase the carbon tax by 14% in 2026 from NOK 1,176, in line with the plan to raise the general level to NOK 2,400 per tonne of Co2 in 2030 and further to NOK 3,400 per tonne of Co2 by 2035. Scope assesses Norway’s QS adjustment for ‘environmental factors’ as ‘neutral’ given the significant medium-term transition risks towards a non-commodity-dependent economy. According to the Norwegian Offshore Directorate, Norway’s offshore oil and gas production will remain broadly steady in 2026 compared to 2025, but investments will fall by around 7%, signalling a slowdown in activity and declining production towards the end of the decade.

Factors related to Norway’s social profile are captured in Scope’s SQM, where the country benefits from its high labour force participation and achieves the highest score among highly-rated peers for its low-income inequality. As most developed economies, Norway faces an ageing population and increasing old-age dependency ratio, although long-run demographic trends compare still favourably vis-à-vis some peers, such as Germany and the Netherlands. The country ranked second after Switzerland in the United Nation’s 2023 Human Development Index – an indicator predicated on life expectancy, educational achievement and income levels. Scope’s QS assessment of Norway’s ‘social factors’ is ‘strong’, mostly reflecting the country’s strong social safety net and inclusive labour market.

Governance-related factors are explicitly captured in Scope’s assessment of a composite index of five World Bank Worldwide Governance Indicators, where Norway has the highest score in Scope’s rated sovereign universe. Following the parliamentary elections in September 2025, the incumbent Labour Party, led by Jonas Gahr Støre, emerged as the largest party, securing 53 out of 169 seats in the Storting. While the Labour Party fell short of an outright majority, the broader centre left ‘red green’ bloc retained a narrow parliamentary majority, allowing Støre to remain in office for a second term. As in the previous legislature, Labour opted to govern alone in a single party minority government, relying on ad hoc parliamentary support from the Socialist Left Party, the Centre Party, the Red Party and the Green Party on confidence and budgetary matters. Scope evaluates Norway’s ’governance’ profile as ‘strong’ in its qualitative assessment, reflecting the historical consensus-driven political system and a tradition of minority governments.

Rating committee
The main points discussed by the rating committee were: i) domestic economic risk; ii) public finance risks, including fiscal framework and debt dynamics; iii) external economic risks, including effects of potential US tariffs; iv) financial stability risks, including housing market and private sector debt; v) ESG considerations; and vi) peer developments.

Rating driver references
1. Norges Bank
2. Norwegian Government
3. Ministry of Finance
4. Norges Bank Investment Management
5. Finanstilsynet
6. Norges Bank

Methodology
The methodology used for these Credit Ratings and/or Outlooks, (Sovereign Rating Methodology, 27 January 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The model used for these Credit Ratings and/or Outlooks is (Sovereign Quantitative Model (ex CVS Model) Version 4.1), available in Scope Ratings’ list of models, published under scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With Rated Entity or Related Third Party participation            YES
With access to internal documents                                         NO
With access to management                                                  NO
The following substantially material sources of information were used to prepare the Credit Ratings: public domain.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlooks and the principal grounds on which the Credit Ratings and/or Outlooks are based. Following that review, the Credit Ratings and/or Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlooks are UK-endorsed.
Lead analyst: Alessandra Poli, Analyst
Person responsible for approval of the Credit Ratings: Carlo Capuano, Executive Director
The Credit Ratings/Outlooks were first released by Scope Ratings in January 2003. The Credit Ratings/Outlooks were last updated on 1 August 2025.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
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