Why is Norway's sovereign wealth fund so big?
Background. Norway has experienced economic surpluses since the development of its hydrocarbon resources in the 70s. This reality, coupled with the desire to mitigate volatility stemming from fluctuating oil prices, motivated the creation of Norway's Oil Fund, now the Government Pension Fund-Global (GPF-G).
Everyone in Norway became a theoretical millionaire on Wednesday in a milestone for the world's biggest sovereign wealth fund that has ballooned thanks to high oil and gas prices.
Norway's sovereign wealth fund, the world's largest, was established in the 1990s to invest the surplus revenues of the country's oil and gas sector. To date, the fund has put money in more than 8,500 companies in 70 countries around the world.
OSLO, Jan 30 (Reuters) - Norway's $1.6 trillion sovereign wealth fund, the world's largest, reported on Tuesday a record profit of 2.22 trillion crowns ($213 billion) in 2023, driven by strong returns on its investments in technology stocks.
World's largest sovereign wealth fund loses $34 billion as all asset classes fall in third quarter. The so-called Government Pension Fund Global returned a loss of 374 billion Norwegian kroner ($34 billion) in the third quarter, citing a weaker three-month period, compared with the first half of the year.
Norway is one of the world's most prosperous countries, and the production of oil and gas accounts for 20 percent of its economy. Other important sectors include hydropower, fish, forests, and minerals.
Liquid gold, or black gold, it's been called before. Norway has very large supplies of oil off it's coast, which has secured them riches for long time ahead. The government turned it into a national fund, that is not overspent. It's not private companies who profit, but the entire nation prospers due to it.
Some countries may have more than one SWF. Also, while the United States does not have a federal sovereign wealth fund, several of its states have their own SWFs. The list does not include pension funds that do not meet the SWF criteria.
Despite the advantages, SWFs are not without their drawbacks. One concern is the potential for mismanagement and corruption. Poor governance and lack of transparency can lead to funds being misappropriated or invested in risky ventures, resulting in significant financial losses.
The funding for a SWF can come from a variety of sources. Popular sources are surplus reserves from state-owned natural resource revenues, trade surpluses, bank reserves that may accumulate from budgeting excesses, foreign currency operations, money from privatizations, and governmental transfer payments.
Does Norway have more money than the US?
Using World Bank data, Norway appears to be very rich: GDP per capita in nominal terms was about $90,000 in 2021. Compare that with $70,000 in the US, which is a very rich country itself.
National debt in Norway
The government debt in the period from 2000 to 2022 was between 47.4 billion and 229.5 billion USD. The highest level of the last years at 229 billion US Dollar was reached in 2022. Based on the number of inhabitants, this is a debt of 42,050 USD per person.
Further, when it comes to any unforeseen economic problem, Norwegians can always count on their $1.3 trillion sovereign wealth fund, the world's largest. Not only that, unlike many other rich nations, Norway's high per capita GDP figures are a reasonably accurate reflection of the average person's economic well-being.
Norway had a government debt before oil was discovered in the North Sea. Some of that debt is still live because government issue some bonds with very long maturity periods. The Kingdom of Norway still had debts left over from fighting the Second World War when oil revenues started to flow in the 1970s.
Norway is a modern, highly developed country with a small but very strong economy. Per capita GDP is among the highest in the world, boosted by decades of success in the oil and gas sector and other world-class industries like shipping, shipbuilding, and aquaculture.
The Great Boom, 1843-1875. After the Norwegian spesidaler gained its par value to silver in 1842, Norway saw a period of significant economic growth up to the mid 1870s. This impressive growth was mirrored in only a few other countries.
However, the are some internal differences: While Sweden has the highest gross domestic product (GDP) overall, Norway has the highest GDP per capita.
What's the average salary in Norway? According to Statistics Norway, the average salary in Norway is 637,800 NOK per year or 52,150 NOK per month.
Luxembourg, whose financial sector makes up 25% of its GDP, is the world's richest country by GDP per capita. With a population of just 660,000, the country is also considered a tax haven, incentivizing foreign investment due to its favorable tax policies.
“In Norway, we have a welfare system that takes care of us and saves us from a lot of worries. The inequality is low when it comes to the standard of living. We feel safe and free and have a strong sense of belonging”, she adds.
Is Norway rich because of oil?
Norway, which last year overtook Russia as Europe's biggest natural gas supplier, has been one of the world's top crude producers for the past half-century. That's thanks to its gigantic North Sea petroleum deposits — the spoils of which have been used to provide a robust safety net for current and future generations.
Norway is a Safe Country to Visit
Norway is known to be one of the safest countries in the world. Crime rates are extremely low even in major cities such as Oslo, Bergen, Trondheim, and Stavanger. As with any other urban areas, you should take certain precautions but there's not much to be afraid of.
Why doesn't the United States have a wealth fund like Norway? The US has been running a budget deficit for a long, long time, so there hasn't been a surplus to put into a wealth fund.
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