All Norwegians become crown millionaires, in oil saving landmark

OSLO Wed Jan 8, 2014 12:25pm EST

Siv Jensen, leader of Norway's Fremskrittspartiet (Progress party), speaks to party members while waiting for the result of the general elections in Oslo, September 9, 2013. REUTERS/Gorm Kallestad/NTB Scanpix

Siv Jensen, leader of Norway's Fremskrittspartiet (Progress party), speaks to party members while waiting for the result of the general elections in Oslo, September 9, 2013.

Credit: Reuters/Gorm Kallestad/NTB Scanpix

OSLO (Reuters) - Everyone in Norway became a theoretical crown millionaire on Wednesday in a milestone for the world's biggest sovereign wealth fund that has ballooned thanks to high oil and gas prices.

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, making the Nordic nation an exception when others are struggling under a mountain of debts.

A preliminary counter on the website of the central bank, which manages the fund, rose to 5.11 trillion crowns ($828.66 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, squirreled away for a rainy day for them and future generations. Norway has resisted the temptation to splurge all the windfall since striking oil in the North Sea in 1969.

Finance Minister Siv Jensen told Reuters 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 mot 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.

(Reporting by Alister Doyle; Editing by Alison Williams)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see
Comments (6)
Wulff wrote:
We could learn something!

Jan 10, 2014 2:13am EST  --  Report as abuse
ruhr wrote:
Although admirable, the setting aside of income by the Norwegian State in the Sovereign Wealth Fund for future generations, should not be at the expense of today’s children.

In a little more than twenty years the fund has grown to Norwegian kroner five (5) trillion; in line with an act of the parliament, only four percent of the earnings are made available to the government of the day. Again, while admirable, government must be adaptable, flexible, and drive change when circumstance merit and so meet the challenges government will face in future years.

Whilst the majority of Norwegian no doubt agrees with the establishment of the fund, more and more public calls for improvement in the delivery of quality education and hospital services, as well as calls for upgrades or new public infrastructure are growing, and should not be ignored. The calls for government spending are accompanied by similar calls for a crackdown on welfare payments and welfare miscreants notwithstanding Norwegian’s generosity towards their fellow citizens, who on occasions warrant a helping hand.

Norway’s leadership must act boldly to address what is rapidly becoming a looming threat to the well-being and the economic standing of Norway and the populace. This government is afforded a luxury not afforded many a government in that it can afford to be bold, to put the well-being of the populace above that of the party; the leadership must not shrink from the task.

Norway’s parliamentarians should reach consensus and agreement today, right now- and without regard to the party in office four, five or ten years from now- to withdraw an amount not greater than 10% of the assets under management per year for each of five years, and use the funds withdrawn to position Norway’s economy and its people at the forefront of innovative developed nations for the next fifty years.

To this end an independent body should be appointed by parliament and work in close consultation with parliament to identify, review and determine infrastructure that must be upgraded or built anew, such as road networks, port facilities, hospitals, schools, and universities. This process will look at ways to upgrade educational, university, medical skills and training to position and outfit the next generation of Norwegians with the skills sets needed to compete for tomorrow’s challenging careers.

After agreeing on the projects to deliver on the goal, the directorship and board of the committee will set about the task of delivery the projects over a ten year period, reporting on their progress as and when required to the parliament of the day.
As for welfare, government must insist welfare is not an entitlement, and should be earned. To this end government should look to introduce training and skills programs to get the unemployed into work, requiring the payment of welfare be in exchange for services and or labor provided to the community. Do nothing and Norway will come up against the reality of the early 1990’s that shook the Nordic countries out of their slumber, which although acknowledging the welfare state to be excellent, it was unaffordable and unsustainable.

Future generation will fail if the only asset they have is riches. It is the responsibility of this generation and this parliament to educate and equip today’s children with the knowledge and skills to be tomorrow’s adults.

Jan 10, 2014 2:55am EST  --  Report as abuse
pinkey wrote:
Some of the tightest folks on the face of the earth. I know because I was involved with one

Jan 10, 2014 5:52am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.