Azerbaijan, Baku, Nov. 20 / Trend E. Ismayilov /
The changes made to the rules of storage, allocation and management of foreign funds of the State Oil Fund of Azerbaijan (SOFAZ) do not include toughening the requirements for external managers, SOFAZ told Trend on Saturday.
The rules of storage, allocation and management of SOFAZ's foreign funds, adopted on June 19, 2001, were amended by the decree of the Azerbaijani President in late October.
According to the information, after making the changes, the main requirements to the external managers remained unchanged.
"The amendments made to the rules do not include any toughening of requirements to external managers," SOFAZ said. "As before, SOFAZ's assets may be transferred to external managers managing the funds to the amount not less than $1 billion, or having experience in this field for over five years."
Currently, SOFAR managers are the World Bank's Treasury Department, and banks Clarident (a division of Credit Suisse) and Deutschebank Asset Management.
The amendments to the rules specify demands for foreign managers to be involved in the management of the State Oil Fund's portfolio of investments. Particularly, managing SOFAR assets can be a foreign manager whose credit rating or credit rating of his/her key founder is not lower than the investment level (Standard & Poor's, Fitch, or Moody's), or he/she should have no less than 5-year positive experience in managing assets, or experience inmanaging assets worth no less than $1 billion.
The Oil Fund may pass up to 60 percent of its investment portfolio to foreign managers for managing purposes, but no one manager may manage more than 15 percent of the portfolio's combined value. The benchmark for determination of profitability of SOFAR assets in an investment fund (except for portfolio management-related expenditures) is the 3-month LIBOR publicized by the UK Association of Banks.
SOFAZ was established in 1999; its assets amounted to $271 million.
SOFAZ's assets increased by 41.6 percent as of Oct. 1and hit $32.242.5 billion compared to early 2011.
Based on SOFAZ's regulations, the funds may be used for the construction and reconstruction of strategically important infrastructure facilities, as well as solving important national problems. In 2001-2009 special attention was drawn to the development of the oil and infrastructure sectors, as well as the non-oil sector of the country. At the moment, a number of important projects in
irrigation and transportation are financed at the expense of the funds.
The main purposes of the fund are: accumulation of funds and placement of the fund's assets abroad to minimize the negative impact on the economy, preventing a "Dutch syndrome" to ensure savings for future generations and to maintain the current socio-economic standard in the
country.
The official exchange rate is 0.7865 AZN/USD.