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SOFAZ budget revenues exceed 10 bln manats

21 October 2014 16:02 (UTC+04:00)
SOFAZ budget revenues exceed 10 bln manats

By Aynur Jafarova

The budget revenues of Azerbaijan's state oil fund SOFAZ reached 10.131 billion manats in the third quarter of 2014. This comes as the fund's budget expenditures constituted 8.041 billion manats during the same period of time.

"Some 9.969 billion manats was gained from the implementation of oil and gas agreements, including 9.947 billion manats from the sale of profit oil and gas, 6.8 million manats from transit payments, and 13.3 million manats from bonus payments. Revenues from payments per acre in the first half of 2014 amounted to 1.7 million manats," SOFAZ said on October 20.

Meanwhile, the income of the fund from the management of its own funds amounted to 162.3 million manats in the reported period.

"The fund's extra-budgetary revenues connected with the revaluation of foreign exchange totaled 962.7 million manats. SOFAZ's extra-budgetary revenues relating to the price changes of gold amounted to 3.7 million manats while extra-budgetary expenses related to price changes of USD, euro, GBP and other currencies totaled 966.4 million manats," the fund noted.

Since the first quarter of 2012, SOFAZ began purchasing gold and the amount of purchased gold has been 30.175 metric tons (970,146 ounces).

Some 254.2 million manats were directed to financing the improvement of social-economic condition of refugees and internally displaced persons, while 24.8 million manats were spent to finance the reconstruction of the Samur-Absheron irrigation system.

"Some 47.5 million manats were directed to financing Baku-Tbilisi-Kars railway construction and 18 million manats were directed to financing "The state program on the education of Azerbaijan youth abroad in the years 2007-2015". The fund's transfers to the state budget were 7.400 billion manats. Expenditures of the fund to finance the state's share in the joint-stock company established under the TANAP and TAP projects to ensure the supply of Azerbaijani gas to Europe amounted to 40 million manats for the first 9 months of 2014, and some 223.5 million manats were allocated for the construction of the STAR refinery complex," the fund stressed.

The costs of administering the fund were equal to 33.5 million manats.

SOFAZ also said in January-September, some 80.8 percent of its investment portfolio was invested in financial tools for up to five years.

As of October 1, the total volume of SOFAZ investment portfolio was $37.266 billion, or 99.9 percent of the total volume of assets.

Around 45.9 percent of SOFAZ investment portfolio is placed in securities for a one-year period, 30 percent for one to three years, 4.9 percent for three to five years and 8.8 percent for more than five years. Some 10.4 percent is kept in real estate, assets and gold.

SOFAZ also said as of September 30, 2014, around 82.2 percent of the investment portfolio was placed in bonds. Around 21 percent accounted for the securities with 'AAA' ratings, 19.2 percent in 'AA', 32.2 percent in 'A', 26.9 percent in 'BBB' and 0.7 percent in other securities.

SOFAZ assets cannot be placed in securities with a lesser investment rating.

Currently, 17.2 percent of SOFAZ investment portfolio is placed in bonds of agencies and international organizations, 6.5 percent - sovereign debt securities, 18.2 percent - financial bonds, 43.3 percent - corporate bonds, 9.7 percent - short term commercial securities, 5.1 percent - guaranteed bonds.

Around 7.4 percent of the investment portfolio is placed in deposits and monetary market tools, gold-3.2 percent, real estate- 2.8 percent, assets-3.5 percent, investments in the projects - 0.9 percent.

The assets of the investment fund were placed as follows: 54.11 percent in European countries, 22.32 percent in North America, 12.59 percent in the Asia-Pacific Ocean region, 1.19 percent in the Middle East, 3.69 percent in South America and 6.1 percent in international financial organizations, Africa - 0.01 percent.

SOFAZ went on adding that around 53.8 percent of the investment portfolio of the Azerbaijani State Oil Fund (SOFAZ) is concentrated in U.S. dollars (over $20 billion) in the first nine months of 2014.

Some 34 percent of SOFAZ's investment portfolio is concentrated in euro (9.99 billion euro), 5.1 percent - in British pounds (1.17 billion pounds), 1.1 percent - in Turkish lira, 0.5 percent - Australian dollars, 1.1 percent - Russian rubles, 1.2 percent - Korean Won.

The remaining part of the portfolio (3.2 percent, or about $1.2 million) is concentrated in gold.

The assets of SOFAZ as of October 1, 2014 have increased by 3.98 percent compared to early 2014 ($35.877 billion) standing at $37.305 billion.

SOFAZ, an entity that accumulates and manages Azerbaijan's oil and gas revenues, was established in 1999 with assets worth $271 million.

The main purposes of the fund are accumulation of funds and placement of assets abroad to minimize negative impacts on economy, prevention of the 'Dutch disease', ensuring savings for future generations, and maintaining the current social and economic standards in the country.

SOFAZ assets are placed partly in securities, money market instruments (deposits, bank accounts).

According to SOFAZ's investment strategy, up to five percent of the investment portfolio may be invested in stock, up to five percent in real estate and up to five percent in gold.

The official exchange rate on October 21 was 0.7843 AZN/USD.

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