High oil and gas prices increase value of
Norway's sovereign wealth fund to $1.05 trillion
Everyone's a millionaire
Everyone in Norway, in theory, became a millionaire on
Wednesday.
The country's sovereign wealth fund has ballooned thanks to high
oil and gas prices.
Set up in 1990, the fund is the world's biggest,
owning around 1 per cent of the world's stocks, as well as bonds
and real estate from London to Boston.
A preliminary counter on the website of the central
bank, which manages the fund, rose to 5.11 trillion crowns (S$1.05
trillion), fractionally more than a million times Norway's most
recent official population estimate of 5,096,300.
FIRST TIME
It was the first time it reached the equivalent of a million
crowns each, central spokesman Thomas Sevang said.
Not that Norwegians will be able to access or spend
the money, squirrelled away for a rainy day for them and future
generations.
Norway has resisted the temptation to splurge the
windfall since striking oil in the North Sea in 1969.
Finance Minister Siv Jensen told Reuters the fund,
calling the Government Pension Fund Global, had helped iron out
big, unpredictable swings in oil and gas prices. Norway is the
world's No. 7 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 in an e-mail.
The fund, equivalent to 183 per cent of last year's
gross domestic product, is expected to peak at 220 per cent around
2030.
"The fund is 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 Mr 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. Governments can
spend 4 per cent of the fund in Norway each year, slightly more
than the annual return on investment.
Still, in Norway, oil wealth may have made the
state reluctant to make reforms or cut subsidies unthinkable
elsewhere. Farm subsidies allow farmers, for instance, to keep
dairy cows in heated barns in the Arctic.
News, The New Paper, The New Paper, Friday, January 10 2014, Pg
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