The State Oil Fund of the Republic of Azerbaijan (SOFAZ) reports that on December 31, 2022, SOFAZ assets increased by 8.9% compared to the beginning of 2022 (45 025.1 million US dollars) and amounted to 49 033.6 million US dollars.

During the period of January-December 2022, the budget revenues of SOFAZ amounted to 9 586.0 million manats, and the budget expenses amounted to 4 699.0 million manats.

During the period of January-December 2022, the revenues of SOFAZ related to the implementation of oil and gas agreements are 20 480.4 million manats, including 19 698.9 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 5.6 million manats.

During the reporting period, 7 923.0 million manats have been transferred to the state budget within the 2022 SOFAZ budget implementation framework. 22.2 million manats have been directed to financing the "2019-2023 State Program on increasing the international competitiveness of the higher education system of Azerbaijan" and 15.2 million manats have been directed to financing “State Program for the Education of Youth at Prestigious Universities of Foreign Countries for 2022-2026”.

From January-December 2022, the expenses related to the management of SOFAZ amounted to 27.9 million manats.

During the period of 2022, the negative difference arising from the short-term market value fluctuation related to the revaluation of SOFAZ assets was equal to 2 461.3 million manats.

The extra-budgetary expenses of SOFAZ amounted to 878.5 million manats due to the difference caused by the variation in exchange rates.

We would like to inform you that during the fourth quarter, the continued decline in optimism in economic forecasts and the rise in recession expectations against this backdrop, as well as the relatively low inflation indicator in the United States, increased the likelihood that central banks would switch to a softer monetary policy in future periods, which was good news to the investors. Thus, compared to other quarters of the year, positive profitability in the stock and bond markets was observed during the last quarter.

At the same time, the growth rate of the discount rates in the USA during the 4th quarter was relatively low compared to other quarters, in turn the growth rate of the discount rates in European Central Bank increased even more. As a result, the US dollar fell in value during the year, while the euro and other currencies strengthened.

The current instability of the global economy and the global financial markets in 2022 had an effect on the investment portfolio of SOFAZ. In addition to the statements made by central banks regarding the continuation of tight monetary policies, the Russia-Ukraine conflict that started at the beginning of the year and its impact on energy prices have further increased the fluctuations observed in the financial market against the backdrop of rising inflation rates. During the year, statements of central bank officials regarding monetary policy plans for the coming periods, as well as inflation and economic indicators affecting the labor market were mentioned as the main factors affecting the financial markets. So, even if the US inflation rate has been trending downward in recent months, the labor market's stability and its usually positive impact on the inflation rate indicate that the Fed's tight monetary policy will be maintained in early 2023. In Europe and the United Kingdom, inflation expectations remain quite high, and the lack of labor force in the labor market in the United Kingdom indicates that the central banks' tight monetary policy will continue at a faster pace than in the United States.

Due to the above-mentioned cases, revenues from oil and gas sales increased during the year and it was reflected in the investment portfolio of SOFAZ.