The State Oil Fund of the Republic of Azerbaijan (SOFAZ) reports that on June 30, 2022, SOFAZ assets increased by 0.63% compared to the beginning of 2022 (45 025.1 million US dollars) and amounted to 45 306.8 million US dollars.
During the period of January-June 2022, the budget revenues of SOFAZ amounted to 6 935.2 million manats, and the budget expenses amounted to 4 663.2 million manats.
During the first half of 2022, the revenues of SOFAZ related to the implementation of oil and gas agreements are 10 369.2 million manats, including 9 588.6 million manats from
oil and gas profits, bonus payments amounted to 768.7 million manats, transit revenues amounted to 7.2 million manats, acre account payments amounted to 4.7 million manats.
During the reporting period, 4 648.0 million manats have been transferred to the state budget within the 2022 SOFAZ budget implementation framework. 4.2 million manats have been directed to financing the "2019-2023 State Program on increasing the international competitiveness of the higher education system of Azerbaijan". From January-June 2022, the expenses related to the management of SOFAZ amounted to 11.0 million manats.
During the past half year, the negative difference arising from the short-term market value fluctuation related to the revaluation of SOFAZ assets was equal to 3 434.0 million manats. The extra-budgetary expenses of SOFAZ amounted to 1 793.3 million manats due to the difference caused by the variation in exchange rates.
The current turbulence in the world economy, as well as in the international financial markets, didn't go without impact on the investment portfolio of SOFAZ. As in a severe slowdown in global economic growth, the highest price increase registered in the last forty years in developed countries, characterized by long-term low inflation indicators, as well as the deepening of the geopolitical crisis and disruptions in the post-pandemic supply chain and sharp fluctuations in global financial markets due to the ongoing and tight restrictions in China are observed.
As mentioned earlier, the international financial markets mirror the global economy, and in a time of uncertainty, such a reaction by the financial markets is inevitable. As a result, the decline in economic growth in the United States in the first quarter of the current year, very little economic development in regions and countries such as the Eurozone and Great Britain, very high inflationary trends, as well an unbalanced tight monetary policy conducted by central banks was observed. This was characterized as an unconventional situation and an infrequent occurrence in history. A sharp decline in the values of both global stock and bond indices and severe fluctuations in exchange rates were also among the negative observations.
As in the investment portfolios of many institutional investors, including sovereign funds, the funds of SOFAZ mainly consist of stocks and bonds quoted on the stock exchange denominated in various currencies (about 80% of the investment portfolio). These fluctuations in the financial markets were reflected in the investment portfolio of the investors mentioned above and in the investment portfolio of SOFAZ as an unrealized temporary negative difference caused by short-term price fluctuations.