TODAY.AZ / Business

SOFAZ's assets increase by 10.4 pct

29 October 2019 [14:34] - TODAY.AZ

By Azernews


By Leman Mammadova

State Oil Fund of Azerbaijan (SOFAZ) has published a report on investment activity following the first nine months of 2019.

As of September 30, assets of the SOFAZ increased by 10.4 percent compared to the early 2019 and amounted to $42.5 billion. The growth of assets is due to higher income of the Fund, including income from the management of SOFAZ funds.

In January-September, the Fund’s budget revenues amounted to 14.7 billion manats ($8.65 billion), and budget expenditures - 7.7 billion manats ($4.53 billion).

The revenues from the sale of profitable oil and gas in Azerbaijan amounted to 11.3 billion manats ($6.65 billion), transit income - 13.4 million manats ($7.88 million), bonus payments - 766.4 million manats ($450.96 million), per-cap payments - 4.7 million manats ($2.77 million).

Moreover, SOFAZ transferred 7.5 billion manats ($4.41 billion) to the state budget in January to September 2019.

Some 126.4 million manats ($74.38 million) have been allocated for the implementation of measures to improve the social and living conditions of refugee and internally displaced families. The administrative expenses in the reporting period amounted to 18 million manats ($10.59 million).

According to the SOFAZ, 35.45 percent of the Fund’s investment portfolio are located in Europe (37.05 percent in 2018), 23.71 percent - in North America (23.1 percent in 2018), 33.25 percent - in the Asia-Pacific region (28.71 percent in 2018), and the rest - in other regions.

In particular, 69.6 percent of the investment portfolio is in bonds and money market instruments, 13.4 percent- in stocks, 5.6 percent - in real estate, as well as 11.4 percent in gold, which is equivalent to 100.66 tons.

SOFAZ still prefers to place the bulk of its assets in U.S. dollars. As of September 30, the U.S. dollar accounted for 54.7 percent of SOFAZ's investment portfolio, euro 33.8 percent, pounds sterling 4.9 percent, Australian dollar 0.5 percent, Turkish lira 0.8 percent, Russian ruble 0.7 percent, South Korean won 0.4 percent, Chinese yuan 1.1 percent, Japanese yen 1.6 percent and other currencies 1.5 percent.

The revenues of the SOFAZ are formed primarily from revenues from the sale of oil, which remains at Azerbaijan’s disposal in accordance with the production-sharing agreements.

Budget revenues of SOFAZ reached 17.6 billion manats ($10.36 billion) in 2018, which is a 31.1 percent increase compared to 2017.

SOFAZ, established in 1999 with the assets of $271 million, is aimed at efficient accumulation of resources and placement of assets abroad, as well as for the preservation and multiplication of funds received from the effective management of oil revenues in order to minimize the negative effect to 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.

SOFAZ has been included to the list of 100 most significant, resilient, and impactful asset owner and public executives of 2018, ranking 10th. The top 100 ranking has been compiled by the Sovereign Wealth Fund Institute (SWFI) based on several dimensions including, innovation, funding, environmental circumstances, returns, unique programs and initiatives undertaken.

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