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Friday, January 10, 2014

Nation of millionaires (and Crorepathis) .. the Nordic country

It certainly is a nice place to be in; and perhaps by the time – you finish this post – would love to be there……

In the United Nation's 2013 World Happiness Report, this country took the second place spot. The report surveyed 156 countries and looked at a number of factors, including life expectancy and health, freedom and social support.  The crime rate here  is incredibly low. The murder rate is low. The incarceration rate is low. In this country – ‘Allemannsrett’  literally translates to "all men's rights." It's a "freedom to roam" public rights law that allows the right of access to and passage through all uncultivated land. This means you can pitch a tent or hike through any land that is "utmark" (non-cultivated). Also, wild-berrying is permitted everywhere. This little rule is extra awesome because there tons of jaw-droppingly beautiful places are there to see and enjoy and ~ few barriers stopping you.  It has -  Fredrikstad fortress  ~ the best preserved fortress town. Fredrikstad fortress was constructed between 1663-1666.  The central bank of the country is – ‘Norges Bank’ which apart from  traditional central bank responsibilities,  manages Government Pension Fund.   

No more clues and no marks for finding it out – it is ‘Norway” - officially the Kingdom of Norway, a Scandinavian unitary constitutional monarchy.  Norway has a total area of 385,252 square kilometres (148,747 sq mi) and a population of a little above 5 million, being the 2nd least densely populated country in Europe. The country shares borders  with Sweden, Finland, Russia, Denmark …..  its capital city Oslo is the largest in the nation. In 1380, Norway was absorbed into a union with Denmark that lasted more than four centuries. In 1814, Norwegians resisted the cession of their country to Sweden and adopted a constitution. Norway remained neutral in World War I. Despite its declaration of neutrality in World War II, Norway was occupied for 5 years by forces o fNazi Germany. In 1949, it became a founding member of NATO. Discovery of oil in adjacent waters in the late 1960s boosted Norway's economic fortunes. The petroleum industry accounts for around a quarter of the country's gross domestic product.

Norway is in news now – because of its richness. The government’s wealth fund grew to 5.11 trillion crowns, or $828 billion, according to Norges Bank — the country’s central bank that manages the fund. Reuters reports that the number of crowns in the fund is “fractionally more than a million times Norway’s most recent official population estimate of 5,096,300.” A sovereign wealth fund (SWF) is a state-owned investment fund investing in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Sovereign wealth funds invest globally. Most SWFs are funded by revenues from commodity exports or from foreign-exchange reserves held by the central bank. 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 this week. The Nordic nation is proving to be an exception as others struggle under a mountain of debts. Norway has resisted the temptation to splurge all the windfall since striking oil in the North Sea in 1969

That means – everyone in Norway became a theoretical crown millionaire in Jan 2014  in a milestone for the world’s biggest sovereign wealth fund that has ballooned thanks to high oil and gas prices. This is the first time the Government Pension Fund Global has reached such levels, according to Norges Bank, but that does not mean people will be able to go out and spend all this money. It’s part of a government savings scheme that holds the money for a rainy day and for future generations. Set up in 1990, the fund owns around 1 per cent 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.

Its Finance Minister is quoted as saying 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. The fund, equivalent to 183 per cent of 2013 gross domestic product, is expected to peak at 220 per cent around 2030. Its Norway’s way of managing to put aside money for the future.  Norway has sought to avoid the boom and bust cycle by investing the cash abroad, rather than at home. Governments can spend 4 per cent of the fund in Norway each year, slightly more than the annual return on investment.

The opulent 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.”  It is also stated that Norway is expensive.   Oslo, where a pint of beer costs £5, is the world's most expensive capital according to the Economist. Dinner for two in an average restaurant can easily cost £200. There have been Countries which have had short-lived booms when they could cash in from natural resource exploitation – and have subsequently found it difficult to adjust…. Norway has proved to be different. 

With regards – S. Sampathkumar.

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