Azerbaijani Oil Fund’s reserves have declined by 5.9 %

Azerbaijani Oil Fund’s reserves have declined by 5.9 %

The assets of the State Oil Fund of the Republic of Azerbaijan (SOFAZ) have dropped by 5.86% compared to the beginning of 2015 from $ 37,104 billion US. to $ 34, 930 billion US. Budget revenues of the SOFAZ reached 2,028 billion manat ($ 1, 932 billion US with new rate) , while budget expenditures constituted 2,336 billion manat ($ 2,225 billion US with new rate) in the first quarter of 2015. 1,939 billion manat ($ 1,846 billion US with new rate) was received from the implementation of oil and gas agreements, including 1,936 billion manat ($1,844 billion US with new rate) from the sale of profit oil and gas. The revenues from managing assets of the Fund for the first quarter of 2015 amounted to 89.1 million manat ($ 84,9 million US with new rate).

SOFAZ has also reported that 1,942 billion manat ($ 1,849 billion US with new rate) were transferred to the state budget. Meanwhile, 307.4 million manat ($ 292,7 million US with new rate) were directed to financing the “Southern Gas Corridor” project.

CESD experts have underlined that the manat’s devaluation has helped the SOFAZ to minimize the dropping of its reserves. The manat’s depreciation against the dollar will aid SOFAZ, to some extent, to save its reserves in up-coming months, too. SOFAZ’s 2015 income will be $13,136 billion US if the average crude oil price in the world market is $90 US per barrel during year. Meanwhile, expenditures will be 11, 814 billion manat ($15,146 billion US at the previous exchange rate of the manat and $11.251 billion US at new exchange rate) in 2015 according to the official law on the State Oil Fund. The very important fact is that SOFAZ’s revenue is in US dollars but its expenditure is in Azerbaijani manat. This means themanat’s devaluation will help the Oil Fund save $3,895 billion US in oil money ($15,146 billion US- $ 11,251 billion US) in 2015 alone. On the other hand CESD’s latest assessment shows that SOFAZ will earn $4.5 billion US less if crude oil’s average price is $60 US per barrel in 2015. Then, the oil fund’s total income will be $8.636 billion US instead of $13,136 billion US in 2015. In this case, SOFAZ’s income in local currency will be $9,067 billion manat. It means that SOFAZ will be able to reach its 2015 fiscal targets through the devaluation. The Government of Azerbaijan will also manage to slightly reduce the declining ratio of its currency and state reserves.

CESD has also reported that decline of SOFAZ reserves will continue in up-coming months of 2015 if crude oil price stays less $ 80 US per barrel.

© CESD, 2015

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