11 January,2014 10:01 AM IST | | Agencies
Norway's sovereign wealth fund has ballooned so much due to high oil and gas prices that every person in the country became a theoretical millionaire this week
The Nordic nation is proving to be an exception, as others struggle under a mountain of debts. Set up in 1990, the fund owns around 1 per cent of the world's stocks, as well as bonds and real estate from London to Boston, making the country an exception when others are struggling under piles of debts.
A preliminary counter on the website of the central bank, which manages the fund, rose to 5.11 trillion crowns ($931.87 billion), fractionally more than a million times Norway's most recent official population estimate of 5,096,300. It was the first time it reached the equivalent of a million crowns each, central bank spokesman Thomas Sevang said. Not that Norwegians will be able to access or spend the money, which is being saved for future generations or times of national hardship.
Norway has resisted the temptation to splurge all the windfall since striking oil in the North Sea in 1969. Finance minister Siv Jensen says the fund, called the Government Pension Fund Global, had helped iron out big, unpredictable swings in oil and gas prices. Norway is the world's number seven oil exporter. "Many countries have found that temporary large revenues from natural resource exploitation produce relatively short-lived booms that are followed by difficult adjustments," she said.
The fund, equivalent to 183 per cent of 2013 gross domestic product, is expected to peak at 220 per cent around 2030. "The fund is a success in the sense that parliament has managed to put aside money for the future. There are many examples of countries that have not managed that," said Oeystein Doerum, chief economist at DNB Markets. Norway has sought to avoid the boom and bust cycle by investing the cash abroad, rather than at home.
