Funds accumulated in Azerbaijan over period of high oil prices close to country's total economy

Economy Materials 14 March 2020 16:01 (UTC +04:00)
Funds accumulated in Azerbaijan over period of high oil prices close to country's total economy

BAKU, Azerbaijan, March 14

By Nargiz Ismayilova - Trend:

Recently, questions about the impact of negative processes associated with the risk of the spread of coronavirus and a sharp drop in crude oil prices on the assets of the State Oil Fund of Azerbaijan (SOFAZ) and the role of the fund in formation the country's monetary policy have been raised in the media and social networks, Trend reports referring to SOFAZ.

Touching upon the impact of a possible further fall in crude oil prices on the execution of SOFAZ obligations to make transfers to the state budget, a source in the fund noted that expenses associated with transfers to the state budget are SOFAZ's responsibility and this commitment should be executed regardless of fluctuations in crude oil prices.

The source also noted that SOFAZ's budget for 2020 provides for budgetary commitments in the amount of 11.56 billion manat ($6.8 billion), and for the execution of this commitment, the fund provides for the sale of a total of $6.8 billion in foreign currency in 2020.

“Since the beginning of 2020, foreign currency in the amount of 3.06 billion manat ($1.8 billion) has been put up for sale. To execute the remaining commitments, the fund plans to put up for sale $5 billion in foreign currency, which gives sufficient security to fulfill the obligation,” the source said.

According to SOFAZ, these funds, which currently have a significant share, are the biggest guarantee of the full and accurate execution of SOFAZ budgetary commitments.

“Over the past period of high crude oil prices, SOFAZ has collected more than $43 billion, which is close to the country's total volume of economy. These funds, which have been accumulated in favorable economic conditions, are used to create a 'safety airbag' during economic shocks, including deficits that may arise in the state budget,” the source in the SOFAZ noted.

(1 USD = 1.7 AZN on March 14)


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