BAKU, Azerbaijan, December 22. The draft budget of the State Oil Fund of Azerbaijan (SOFAZ) for 2023 revenues are provided in the amount of about $8.9 billion, and expenditures - more than 11.392 billion manats ($6.7 billion), Adviser to CEO of SOFAZ Bahruz Bahramov told Trend.
According to him, the predicted price of one barrel of oil in the Fund's budget for 2023 is set at $50 per barrel.
"Revenues in the amount of 7.4 billion manat ($4.3 billion) are planned to be raised through the implementation of oil and gas agreements. At the same time, an income of 1.599 billion manat ($940 million) is projected from the fund's management. In addition, I would like to note that 11.28 billion manat ($6.6 billion) is planned to be transferred to the state budget," he said.
"Within the implementation of these budget forecasts, the budget deficit for 2023 is expected to exceed 2.401 billion manat ($1.41 billion). Considering these rates, by the end of 2023, it is expected that the Fund's assets will amount to $45.4 billion," Bahramov said.
Meanwhile, in the approved budget of the State Oil Fund of the Republic of Azerbaijan (SOFAZ) for 2022, the amount of income related to the implementation of oil and gas agreements is estimated at the level of some 15.789 billion manat ($9.26 billion).
According to him, from January through September 2022, the fund's budget received a total of 15.789 billion manat ($9.26 million) from the implementation of the oil and gas agreements. By the end of the year, it is predicted that this amount will reach 19.972 billion manat ($11.7 billion).
"With the full implementation of SOFAZ's approved expenditures for 2022, the assets of the fund will total about $47 billion," the advisor to CEO said.
Speaking about SOFAZ's investment strategy, Bahramov noted that it is primarily aimed at ensuring macroeconomic stability.
According to Bahramov, the strategy is also aimed at reducing the negative effects of economic shocks on the economy of our country, that is, it plays the role of a ‘safety cushion’ in the event of economic instability in foreign markets
“SOFAZ's foreign currency investment portfolio is distributed as follows: 70.8 percent - in the US dollar, 19 percent - in the euro, 4.7 percent - in pound sterling, and the rest (5.5 percent) - in the Australian dollar, Turkish liras, Russian ruble, Chinese yuan, Japanese yen, and other currencies," the advisor noted.
"In the fund's portfolio, about 63 percent were fixed income and money market instruments, 18.7 percent - stocks, 6.3 percent - real estate, 12 percent - investments in gold (101.8 tons)," Bahramov explained.
"Regarding fixed income and money market instruments, 69.9 percent of those assets were invested in AAA credit rating instruments, and the rest - in AA (16.7 percent), A (10 percent), and BBB (2.6 percent) credit rating instruments. Only 0.8 percent of the fund's portfolio is invested in non-investment-grade instruments," he said.
Regarding the equity investments of the fund, we have formed a portfolio covering 1600 companies in 26 developed countries of the world in 14 currencies.
The advisor noted that the investment portfolio of SOFAZ is as well-diversified as possible and insured against possible risks.
"To date, our investments are located in such regions as North America and Europe, Asia, the Asia-Pacific region, Australia/New Zealand, and the Middle East region. In accordance with our strategy, there are no plans to enter any new markets in the near future or to leave our investment region," he added.
The investment portfolio of SOFAZ totals more than $45.4 billion to date.