BAKU, Azerbaijan, May 26. Azerbaijan remains one of the CIS countries with the highest international reserves, Deputy Head of Research, Chief CIS economist at Russian Gazprombank Gulnara Khaidarshina told Trend.
According to her, Azerbaijan's external liquidity position is strengthening faster than expected.
Azerbaijan's total international reserves amounted to $62.6 billion in the first quarter of the year and approached 80 percent of GDP, while providing coverage for 46.9 months of imports.
“Due to high prices for hydrocarbons, the State Oil Fund of the Republic of Azerbaijan’s (SOFAZ) assets during this period increased by 18 percent in comparison with the same period in 2022 to $53.4 billion and updated the historical maximum, despite the transfer to the state budget approved this year in the amount of 11.3 billion manat ($6.6 billion)," she said.
Khaidarshina noted that this was facilitated by high prices for hydrocarbons, which in turn contribute to the replenishment of SOFAZ funds due to the recovery of demand in Asia.
"The average price of Brent in the first quarter was $82.1 per barrel, which is 1.6 times higher than in the state budget. Moreover, the reduction in the volume of SOFAZ sales at weekly auctions by 42.8 percent on an annual basis and the preservation of a stable balance in the foreign exchange market also contributed to the growth of assets," she said.
According to her, the State Oil Fund adheres to a conservative approach to the management of international reserves, despite external crises.
"Oil and gas revenues are sent to SOFAZ, while about 50 percent of the funds are then transferred to the budget in the form of transfers, while the remaining 50 percent are kept in the sovereign fund. SOFAZ's investment portfolio is formed, taking into account in a conservative approach and includes mainly debt instruments (61 percent at the end of the first quarter), as well as stocks (21.1 percent), gold (12.1 percent) and real estate (5.7 percent),” Khaidarshina said.
“The State Oil Fund complies with the established limits not only for classes of instruments, but also for currencies, in order to minimize currency risks. Approximately 70 percent of SOFAZ's investments are nominated in US dollars, 20 percent in euros, 5 percent in pounds sterling and about 5 percent in other currencies," she said.