Azerbaijan`s oil revenues unaffected by global downturn
Azerbaijan`s revenues from the exports of oil have
been unaffected by the global economic meltdown and the body
accumulating the proceeds, the State Oil Fund (SOFAR), has even
increased deposits, according to officials.
SOFAR Executive Director, Shahmar Movsumov, has said the average yield from the management of the country`s oil revenues was 3.8% in 2008, disregarding currency rate fluctuations.
He emphasized that the resource-rich South Caucasus republic has so far weathered the global crisis.
"We accomplished this due to our proper, conservative and diversified policy. We lost due to some of the bonds but gained from others. As a result, we made a net profit to the tune of about $300 million."
Ilham Shaban, who heads the Oil Research Fund, said this was a good indicator for SOFAR, pointing out that Kuwait`s oil fund, for instance, has incurred a loss totaling $30 billion due to the global financial crunch. He noted that Azerbaijan`s success is explained by SOFAR`s averting risks.
"SOFAR has chosen a conservative path, it tries not to invest in riskier transactions. It escaped the financial crisis with lower yield from interest rates," he said, welcoming the government`s policy.
Shaban said, however, that the figure made public by SOFAR has yet to be audited. He stressed that the Fund itself orders its audits, which is always grounds for questioning the accuracy of any announced indicators.
According to SOFAR, Azerbaijan`s oil revenues are mainly held in bonds, and only 2% of the volume is held in stock. The Fund notes that this is one of the main factors fending off the global crisis, as sharp drops in value are chiefly occurring in the stock market.
Jennifer Johnson-Calari, the Director of Sovereign Investment Partnerships at the World Bank, agreed that Azerbaijan`s oil fund has properly managed the country`s oil revenues during the crisis.
"However, it is time to focus on profits," she told Radio Liberty, suggesting that the funds could be placed in the riskier, but more profit-yielding stock market.
As of January 1, 2009 SOFAR`s assets more than quadrupled compared to the same date in 2008 to reach 8.9 billion manats ($11.219 billion). The fund`s revenues are about $14.6 billion in 2008, while expenses were listed at $5.3 billion. The revenue projection was higher by 17%, while the spending projection was met within 98% of expectations. SOFAR transferred some $4.7 billion to the state budget throughout the year.
The SOFAR executive director said oil sales will bring in $14 billion to the fund in 2009 if world crude prices reach $70 per barrel. The figure will only reach $9bn and $10bn if the price of oil stays at $50 per barrel.
Oil prices in world markets were as high as $147 last summer, but they started dropping after the financial crisis hit economies worldwide, and are currently around $45.
The 2009 state budget, endorsed by President Ilham Aliyev, sets the oil price at $70. Some economists and opposition members have claimed this could cause problems in executing the budget.
SOFAR Executive Director, Shahmar Movsumov, has said the average yield from the management of the country`s oil revenues was 3.8% in 2008, disregarding currency rate fluctuations.
He emphasized that the resource-rich South Caucasus republic has so far weathered the global crisis.
"We accomplished this due to our proper, conservative and diversified policy. We lost due to some of the bonds but gained from others. As a result, we made a net profit to the tune of about $300 million."
Ilham Shaban, who heads the Oil Research Fund, said this was a good indicator for SOFAR, pointing out that Kuwait`s oil fund, for instance, has incurred a loss totaling $30 billion due to the global financial crunch. He noted that Azerbaijan`s success is explained by SOFAR`s averting risks.
"SOFAR has chosen a conservative path, it tries not to invest in riskier transactions. It escaped the financial crisis with lower yield from interest rates," he said, welcoming the government`s policy.
Shaban said, however, that the figure made public by SOFAR has yet to be audited. He stressed that the Fund itself orders its audits, which is always grounds for questioning the accuracy of any announced indicators.
According to SOFAR, Azerbaijan`s oil revenues are mainly held in bonds, and only 2% of the volume is held in stock. The Fund notes that this is one of the main factors fending off the global crisis, as sharp drops in value are chiefly occurring in the stock market.
Jennifer Johnson-Calari, the Director of Sovereign Investment Partnerships at the World Bank, agreed that Azerbaijan`s oil fund has properly managed the country`s oil revenues during the crisis.
"However, it is time to focus on profits," she told Radio Liberty, suggesting that the funds could be placed in the riskier, but more profit-yielding stock market.
As of January 1, 2009 SOFAR`s assets more than quadrupled compared to the same date in 2008 to reach 8.9 billion manats ($11.219 billion). The fund`s revenues are about $14.6 billion in 2008, while expenses were listed at $5.3 billion. The revenue projection was higher by 17%, while the spending projection was met within 98% of expectations. SOFAR transferred some $4.7 billion to the state budget throughout the year.
The SOFAR executive director said oil sales will bring in $14 billion to the fund in 2009 if world crude prices reach $70 per barrel. The figure will only reach $9bn and $10bn if the price of oil stays at $50 per barrel.
Oil prices in world markets were as high as $147 last summer, but they started dropping after the financial crisis hit economies worldwide, and are currently around $45.
The 2009 state budget, endorsed by President Ilham Aliyev, sets the oil price at $70. Some economists and opposition members have claimed this could cause problems in executing the budget.
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