SOFAZ’s financial stock transparency greater than in most funds – Fitch

By  Trend

The transparency of Azerbaijani State Oil Fund’s (SOFAZ) financial stocks and flows is greater than the sovereign wealth funds of most higher-rated oil producers, according to Fitch Ratings analysts.

“Assets held by SOFAZ were $34.8 billion at end-June (88 percent of end-2016 GDP). Sovereign net foreign assets will fall due to debt issued as part of the restructuring of the International Bank of Azerbaijan (IBA), but at a forecast 65 percent of GDP at end-2017 (down from 81.1 percent at end-2016),” said Fitch.

SOFAZ was established in 1999 with assets of $271 million. As of 1H2017, assets of SOFAZ increased by 4.96 percent as compared to early 2017 ($33.147 billion) and totaled $34.79 billion.

Based on SOFAZ’s regulations, its funds may be used for the construction and reconstruction of strategically important infrastructure facilities, as well as solving important national problems.

The main goals of the State Oil Fund include: accumulation of resources and placement of the Fund’s assets abroad in order to minimize the negative effects on the economy, prevention of “Dutch disease” to some extent, promotion of resource accumulation for future generations and support of current social and economic processes in Azerbaijan.

As much as 47.3 percent of the investment portfolio of SOFAZ was concentrated in US dollars (almost $16.45 billion) as of July 1. Some 35.9 percent of the total investment portfolio of SOFAZ is concentrated in euros (10.92 billion euros), 5 percent – in British pounds (1.33 billion pounds), 1.1 percent – in Turkish liras, 0.6 percent – in Australian dollars, 1.4 percent – in Russian rubles, 1.2 percent – in South Korean won, 1.4 percent – in Chinese yuan, 1.2 percent – in Japanese yen, 1.4 percent – in other foreign currencies. The remainder of the portfolio (3.5 percent, or around $1.21 billion) is concentrated in gold.