SOFAZ expects no changes in its foreign currency portfolio
BAKU, Azerbaijan, Sept.24
By Leman Zeynalova – Trend:
Azerbaijan’s state oil fund SOFAZ expects no changes in its foreign currency portfolio, which comprises the U.S. dollar (65 percent), the euro (20 percent), the British pound (5 percent) and other currencies (10 percent), SOFAZ CEO Israfil Mammadov said, Trend reports.
SOFAZ expects its assets to hold steady at around $43 billion, as its diversified investments, including in gold, offset the downward economic pressure from the COVID-19 pandemic and cheaper oil, he told Reuters.
"We expect that assets will not significantly deviate from the level of $43 billion at the end of 2020, which is roughly the same as a year ago," Israfil Mammadov said in emailed answers to Reuters.
Mammadov said SOFAZ did not plan any major changes and would only sell any of its real estate in the event of "an attractive offer".
Increased investment in the currently weak Russian rouble and Turkish lira, which represent 1.3 percent of the currency portfolio, was not planned, he said.
Mammadov said that SOFAZ decided not to rebalance its gold allocation, currently 13.6 percent of the portfolio, and temporarily postponed purchases in gold, which hit a record high in August.
Mammadov said that the upper limit of transfers to the state budget in 2020 was approved at 12.2 billion manats.
"Currently, the remaining balance is approximately $3.9 billion and will be transferred by the end of the year," Mammadov said.
The State Oil Fund of Azerbaijan was established in 1999, and at that time its assets stood at $271 million.
The mission of the State Oil Fund of the Republic of Azerbaijan (SOFAZ) is to transform depletable hydrocarbon reserves into financial assets generating perpetual income for current and future generations.
The main goal of the establishment of SOFAZ is to accumulate and efficiently manage oil revenues.
SOFAZ's activity is directed to the achievement of the following objectives:
Preserving macroeconomic stability, ensuring fiscal-tax discipline, decreasing dependence on oil revenues and stimulating development of the non-oil sector;
Ensuring inter-generational equality with regard to the country's oil wealth and accumulate and preserve oil revenues for future generations;
Financing major national scale projects to support socio-economic progress.
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