13:02 GMT25 September 2020
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    Norway's sovereign oil fund, the largest in the world, has exceeded the milestone value of a trillion dollars for the first time, amid a hot debate on efforts to overcome the Nordic country's "petroholism."

    Despite having a population of slightly over 5 million, little Norway possesses the world's largest savings account. Established in the 1990s to manage the Norwegian state's bulging "black gold" revenues, Norway's wealth fund has surpassed the landmark of $1 trillion, which equals nearly $190,000 for each Norwegian.

    The record has been made possibly by the appreciation of the world's major currencies against the dollar and a healthy stock market. The Norwegian Wealth Fund (which is formally divided into two separate entities, the Government Pension Fund Global and the Government Pension Fund Norway) mainly invests in stocks, but also in bonds and real estate.

    "I don't think anyone expected the fund to ever reach $1 trillion when the first transfer of oil revenue was made in May 1996," Yngve Slyngstad, Chief Executive Officer in Norges Bank Investment Management (NBIM), said in a statement, calling the growth in the fund's market value "stunning."

    This ginormous moneybox is intended to finance Norway's solid welfare state once its precious oil wells run dry. With stakes in nearly 9,000 companies in 70 countries, it owns 1.3 percent of the world's market capitalization, and 2.4 percent of Europe's.

    "It's amazing that we have so much money. We are so rich that we should almost feel a bit ashamed," Øystein Børsum, chief economist at Swedbank, told the Norwegian daily Dagbladet.

    Børsum ascribed the incredible accomplishment to luck and proficiency.

    "We haven't been good because it simply happens to be oil on our seabed. It's luck. But we've been good at extracting oil and making sure that the community gets a large part of its value. We have primarily achieved this by not spending the money too quickly, but also by creating a piggy bank that works," Børsum explained.

    While all of Norway's oil revenues are poured into the wealth fund, the government is only allowed to draw the equivalent of the expected financial returns. In 2016, however, the government began withdrawing more than it put in for the first time, due to a slump in crude oil prices.

    At present, the oil fund is 2.5 times Norway's GDP. According to NBIM's forecasts, the wealth fund's market value will reach $1.3 trillion by 2025 amid a more sluggish growth rate.

    Many politicians used the slump, which effectively eradicated some 50,000 jobs from Norway's pivotal industry, to emphasize the importance of alternative revenues. Green Party leader Rasmus Hansson encapsulated the growing economic and environmental concerns in a call to the government to stop all new exploration in Western Europe's leading oil producing country and phase out Norway's entire oil industry within only 15 years.

    "We can't dismantle Norway's most lucrative industry by replacing it with pipe dreams and wishful thinking," Conservative Party energy spokesperson Tina Bru retorted.

    Although the Norwegian government clearly rejected this call and made it clear that the oil industry will remain the country's milk cow for decades to come, the debate on management methods lingers on.


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    sovereign wealth fund, natural resources, oil and gas, Scandinavia, Norway
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