by Alex Porter
The central bank of Norway announced today that it’s oil fund, also known as Pension Fund Global, now stands at $513 Billion.
Yngve Slyngstad, chief executive of the Norges Bank Investment Management (NBIM), which manages the fund, said: “The fund has grown faster and bigger than most people expected since getting its first inflow of capital in May 1996.”
The announcement will heap pressure on the coalition government in Westminster to establish an oil fund for Scotland. First Minister Alex Salmond has already called for such a fund to be established and for oil taxation to be devolved to the Scottish parliament.
Norwegians are now the second richest people in the world with wealth per person standing at $326,530 representing an increase of 195% since 2000. The sovereign wealth fund of the nation, which has a population less than Scotland’s at under 5 million, is the second largest in the world and growing annually at a staggering rate of 26%.
With the Holyrood elections just around the corner, the announcement will add weight to the SNP’s demands that instead of oil revenues being used to plug the gap in Britain’s public finances it should be set aside and invested for future generations.
This case was underlined recently by the former World Bank chief economist Joseph Stiglitz, in an interview with Newsnight Scotland’s Gordon Brewer, when he argued that previous Westminster governments had squandered the wealth instead of investing it prudently.
In a sensational development at his party conference on Sunday, Alex Salmond revealed that former President Bill Clinton’s key aid would join Scotland’s Council of Economic Advisors (CEA). The CEA which advises Scottish ministers has many prominent members but Professor Stiglitz, perhaps the best known living economist, is a coup for the SNP government as it seeks to establish its economic credentials with the Scottish electorate.
As the parties jostle ahead of the Scottish elections on May 6th next year, jobs and the economy will be key deciding issues.
While the crisis in Britain’s public finances deepens the Scottish economy is in surplus. This divergence will focus the economic debate in Scotland on whether Scots should accept David Cameron’s austerity cuts or move towards economic independence.
To convince Scots of the benefits of independence, the SNP will seek to contrast the UK’s worsening budget defecits with Norway’s spectacular economic success.