SOFAZ lost $ 1.3 billion US due to revaluation of foreign exchange

SOFAZ lost $ 1.3 billion US due to revaluation of foreign exchange

State Oil Fund of the Republic of Azerbaijan’s (SOFAZ) revenue was 4 054. 0 million. manats ($ 3860.9 million US), while budget expenditures constituted 4 042.1 million manats ($ 3849.6 million US) in the first half of 2015. Revenue of 3 812.1 mln. manats was received from the implementation of oil and gas agreements, including 3 802.1 mln. manats from the sale of profit oil and gas, 5.7 mln. manats as transit payments, 2.1 mln. manats as bonus payments and 2.2 mln. manats as acreage fees. The revenues from managing assets of the Fund for January-June 2015 amounted to 241.9 mln. manats.

The Fund’s extra-budgetary revenues related to the revaluation of foreign exchange totalled 8 013.4 mln. manats.

As per 2015 budget of the Fund, 3 561.6 mln. manats were transferred to the state budget. The expenditures in the amount of 89.8 mln. manats were directed to financing the improvement of socio-economic conditions of refugees and internally displaced persons. 46.5 mln. manats were used for financing the reconstruction of the Samur-Absheron irrigation system, 17.2 mln. manats were directed to financing Baku-Tbilisi-Kars railway construction and 5.9 mln. manats were directed to financing “The state program on the education of Azerbaijan youth abroad in the years 2007-2015”. 307.4 mln. manats were directed to financing the “Southern Gas Corridor” project. Fund’s administrative and operational expenses for the reporting period were 13.7 mln. manats.

The assets of SOFAZ as of July 1, 2015 have dropped by 3.56% compared to the beginning of 2015 ($ 37,104 billion US.) and stood at$ 35,783 billion US.

According to the CESD calculations, SOFAZ lost $ 1.3 billion US in the first half of 2015 due to revaluation of foreign exchange particularly to the devaluation of Russian ruble and depreciation of euro and Turkish lira. Meanwhile, the oil fund has also potential lost from its gold reserves since gold price declined about 50.0 % after the SOFAZ purchased it.

Due to the decline of oil price in the world market, SOFAZ received less money than forecasted for the half of 2015. Meanwhile, oil fund’s transfer to the state budget was 2 times less than expected.

© CESD, 2015

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