On Wednesday, Jan. 8, every citizen in Norway became a millionaire! According to the 2013 census, that's a total of approximately 5,096,300 millionaires in Norway - at least theoretically they are. But, make no mistake about it, the wealth is there! However, most are probably wondering how exactly did such an unprecedented feat occur.
The Daily Mail reports that Norway's sovereign wealth fund (SWF) has recently 'ballooned' due to the astronomical high prices of oil and gas. The substantial increase in the sovereign wealth fund denotes wealth for the citizens of Norway, as well. So, theoretically, everyone has become quite wealthy.
Established in 1990, the Norwegian SWF maintains ownership of 1% of the world's collective stock, in addition to 'numerous bonds and real estate'. Norway, which is the world's seventh oil exporter, ranks above both Saudi Arabi and Abu Dhabi, where oil is concerned, and the growth in revenue has spiked with the heightened oil prices. According to the Norges Bank Investment Management's online fund market value counter, the sovereign wealth fund swelled to an estimated $5.11 trillion crowns, which equates to approximately $828.66 billion. The wealth fund's value is 'fractionally a million times more than Norway's population of an estimated 5,096,300.
"It was the first time it reached the equivalent of a million crowns each," said Central Bank spokesman Thomas Sevang. But, the wealth won't end there. The fund's recent market value calculation averages out to an estimated 183% of its gross domestic product for 2013. However, it is actually expected to peak around 2030 at a whopping 220%.
"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," stated Oeystein Doerum.
Norway's financial success can actually be accredited to the strict disciplines in financial decisions, as they've avoided the constant urge of frivolous spending. Norwegian Finance Minister, Siv Jensen, has also explained the beneficial factors of the SWF, which is known as Government Pension Fund Global. Jensen told Reuters that the availability of the fund has helped to balance out the unpredictable changes in oil and gas prices.
'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 to the publication.
In an effort to divert the possibility of a 'boom and bust,' Norway has opted to invest the funds abroad, as opposed to sequestering it all at home. But unfortunately, Norwegian citizens won't have the privilege of accessing any of the funds from the massive windfall, as it will be locked away for future generations.