SOFAZ changes budgetary forecasts for 2016
Baku, Azerbaijan, Dec. 23
By Maksim Tsurkov - Trend:
The State Oil Fund of Azerbaijan (SOFAZ) has changed its forecasts for the 2016 budget, the fund told Trend.
The change in budgetary forecasts is connected with the recent decision of the Central Bank of Azerbaijan.
The Central Bank of Azerbaijan switched to the floating rate of the national currency (manat) from Dec.21, 2015. As a result, the exchange rate of the US dollar and euro to manat rose by 47.6 percent and 47.9 percent and stood at 1.55 manats and 1.685 manats, respectively on that day.
At the same time, the second devaluation of the manat didn't have such a considerable impact on the forecasts of this year's budget, as SOFAZ has already received major income from oil and gas sales budgeted for 2015, according to the message.
"As for next year, according to the SOFAZ budget project submitted for approval to the president of Azerbaijan, the revenues of the fund were initially projected at the level of $6.392 billion, or 6.712 billion manats in 2016 given the budgeted basic indexes, that is, at an oil price of $50 per barrel and the national currency rate at the level of 1.05 manats per dollar," the fund said.
"Given the same basic oil price indexes (taking into account the devaluation and the new exchange rate of 1.55 manats to 1 US dollar), SOFAZ revenues in 2016 could amount to 9.907 billion manats," the message said.
"However, given the expected low level of oil prices in 2016, a decrease in revenues from the oil and gas sale is projected," the fund said. "In particular, given an average oil price of $35 per barrel, the total revenues of the fund in 2016 are projected at $3.883 billion, which will amount to 6.017.8 billion manats at the new manat exchange rate."
SOFAZ was established in 1999 with assets of $271 million.
Based on 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.
As of October 1, 2015, SOFAZ assets reduced by 6.38 percent compared to early 2015 ($37.1 billion) and were estimated at $34.74 billion.
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