Baku, Azerbaijan, Dec.27
By Emil Ismayilov - Trend:
The State Oil Fund of Azerbaijan (SOFAZ) is working out a mechanism for decreasing its spending in order to ensure the sustainability of its development in the coming years, SOFAZ head Shahmar Movsumov told Trend.
Certainly, the decrease in oil prices in world markets will negatively affect the revenues of SOFAZ, according to Movsumov. With this regard, SOFAZ is working out various scenarios for its revenues and dynamics of its assets.
The decrease in oil prices continues. Currently, the price per a barrel of oil (depending on the grade of oil) is approximately $60 in world markets, while prior to the decrease, this figure exceeded $110 per barrel.
"Given that SOFAZ has financial obligations to the state budget, as well as obligations on financing the social and strategically important projects, there is a probability of reducing its funds in a short term," said Movsumov.
If the revenues of SOFAZ amounted to 13,600,400,100 AZN and spending totaled 12,302,663,500 AZN in 2013, its budget revenues and spending are forecasted to hit 11,626,943,400 AZN and 10,590,034,800 AZN, respectively in 2014.
SOFAZ's revenues and spending totaled 10,131,900,000 AZN and 8,041,200,000 AZN, respectively as of Q3 of 2014.
The State Oil Fund was created in 1999 and its assets were equal to $271 million that time.
The assets of SOFAZ increased by 3.98 percent and exceeded $37,305,300,000 as of October 1, 2014, compared to early 2014 (around $35,877,500,000).
Under SOFAZ's regulations, its funds may be used for the construction and reconstruction of strategically important infrastructure facilities, as well as solving important national problems.
The main goals of the State Oil Fund include: accumulation of resources and the placement of the fund's assets abroad in order to minimize the negative affect on the economy, the prevention of "Dutch disease" to some extent, promotion of resource accumulation for future generations and support of current social and economic processes in Azerbaijan.
The official exchange rate on Dec.27 is 0.7844 AZN/USD.
---
Follow the author on Twitter: @Emilsmail