For the period of January to March of the 2022, SOFAZ reported budget income and expenses, totaling 2 955.9 mln and 2 764.5 mln AZN, respectively.

During the first quarter of the current year, the fund generated 4 616.7 mln AZN from the implementation of the oil and gas contracts, including 3 845.6 mln AZN from the sales of profit oil and gas, 765.3 mln AZN from the collection of bonuses, and another 5.8 mln AZN from transit payments. Hence, approximately 45 percent of the projected revenues for 2022 under the budget clause “Net inflow from the sales of Azerbaijan’s share of hydrocarbon resources” have been realized.

The fund has also recorded a revaluation loss in the amount of 1 660.8 mln AZN, owing to the recent short-term volatility observed in market prices in the past quarter. The aggregate impact of movements in foreign exchange markets have been favorable, resulting in an extra-budgetary gain of 214.3 mln AZN in the same period.

In the current reporting period, 2 757.0 mln AZN has been transferred to the state budget, as per the fund’s approved budget for 2022. An additional 2.2 mln AZN has been directed towards funding “State program - covering the period of 2019-2023- for increasing the compatibility of the education system in Azerbaijan with international standards”.

Operating expenses covering the January-March 2022 were 5.3 mln AZN.

The fund’s asset under management stood at 45 264.0 mln USD at the end of the first quarter, an increase of around 0.53% compared to the figure of 42 025.1 mln USD at the start of the year.

The unprecedented turn of events in the first quarter of 2022 on both macro-economic and geo-political fronts have resulted in volatility spikes that have gripped financial markets. The threat of an accelerating slowdown in many leading world economies, the hottest inflation figures of the last four decades, and mounting doubts at central banks’ ability to effectively curb inflation without tipping their economies into downturn as well as the supply/demand complications exacerbated by the post-pandemic and geo-political events are at the forefront of uncertainties shaking up the investor sentiment. The unparalleled nature of the events has rattled investors, exacting a heavy toll on both bond and equity markets and putting downward pressure on major fixed income and equity indices, a mix of factors that also impacted SOFAZ’s investment portfolio in the first quarter of the year.

On the other hand, rising energy prices translated into an uptick in the oil and gas revenues, which in turn acted as the main driver of the increase in the fund’s asset under management.