Baku, Azerbaijan, Oct. 20
By Azad Hasanli – Trend:
The State Oil Fund of Azerbaijan (SOFAZ) may lose 794 million manats if oil prices fall by $5, according to draft state and consolidated budgets for 2018 and the next three years.
Currently, Brent crude oil price is $56.87 per barrel. The oil prices grew 8.73 percent for the year and 1.9 percent for the month. However, oil prices have been falling in the last few days. Thus, on Oct. 18, oil prices were slightly higher than $58 per barrel. The price of Azeri Light crude oil for the year increased by 8.9 percent from $53.82 to $58.63 per barrel. For the month, the growth was 1.3 percent.
Nevertheless, these figures are higher than the oil price of $45 per barrel budgeted in Azerbaijan for 2018.
Opinions of experts regarding oil prices vary. However, many international financial organizations make quite optimistic forecasts about oil prices. For example, the International Monetary Fund (IMF) expects that in the next two years, the oil prices will vary within $50-$55 per barrel and the World Bank (WB) expects oil prices to be at $55-$60 per barrel.
According to the draft state and consolidated budgets of Azerbaijan for 2018 and the next three years, SOFAZ's transfers to state budget amount to 9.216 billion manats (83.1 percent of all budget revenues from the oil sector), which is 51.1 percent more than the transfer forecasts for 2017.
In general, SOFAZ's revenues for 2018 are projected at 10.676 billion manats and expenses at 11.986 billion manats.
In January-September 2017, SOFAZ's revenues amounted to 8.793 billion manats and expenses to 6.911 billion manats.
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 effect 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.
(1.7001 manats = $1 on Oct. 20)