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A gov’t spends wisely: Everyone in Norway now a millionaire…With us?

January 28, 2014
Harakahdaily, 27 January 2014

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 recently.

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 percent of the world’s stocks, as well as bonds and real estate from London to Boston.

The surplus revenue is collected in the Government Pension Fund Global.

A preliminary counter on the website of the central bank, which manages the fund, rose to 5.11 trillion kroner (£503.46 billion/$828.66 billion).

This equates to 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 kroner each, central bank spokesman Thomas Sevang said.

Not that Norwegians will be able to access or spend the money – it is squirreled 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 that 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 in an email.

The fund, equivalent to 183 percent of 2013 gross domestic product, is expected to peak at 220 percent 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.

Governments can spend 4 percent 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.

It may also have made some Norwegians reluctant to work.

‘One in five people of working age receives some kind of social insurance instead of working,’ Doerum said, despite an official unemployment rate of 3.3 percent. – MO

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2 Comments leave one →
  1. truthseeker permalink
    January 28, 2014 4:24 pm

    explosive interview…

    KirbyAnalytics.com claims the U.S. “arbitrarily set the price of all strategic goods in the market.” As an example of control, Kirby explains, “We have 10-year U.S. bond rates under 3%, and I would say the United States is actually insolvent, and we have countries like Greece where 10-year bonds are yielding over 9%.” When does this end? Kirby points to look to the finite physical gold market and massive Chinese global buying for a clue. Kirby says, “When China doesn’t get their gold, that’s when this ends, and that might be when we have a war.” Join Greg Hunter as he goes One-on-One with Rob Kirby of KirbyAnalyitics.com

    Category

    News & Politics
    License

    Standard YouTube License

  2. najib manaukau permalink
    January 29, 2014 1:38 am

    At the least the oil revenue is kept for the future generation and that is what it should be ! And where has all the oil revenue in Malaysia gone to ? In the foreign bank accounts of the warlords from Umno and making the egregious Mahathir the richest man in Asia plus the son a multi millionaire or billionaire. When so many million of the Malaysians, especially the million poor Malays remain very poor, why is that so ? And what about the Orang Asli ? The real sons of the soil the worse thing is the country is now heavily in debt and not far from bankruptcy and to avoid this the people of Malaysia is heavily taxed just to pay for the ‘extravagances’ of the Umno warlords.
    Are we going along the same route as Indonesia ? It is too late now trying to milk from an old, dry up cow no matter however much taxes are introduced !

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