The State Oil Fund of the Republic of Azerbaijan (SOFAZ) reports that on March 31, 2023, SOFAZ assets increased by 9% compared to the beginning of 2023 (49 033.6 million US dollars) and amounted to 53 437.6 million US dollars.

During the period of January-March 2023, the budget revenues of SOFAZ amounted to 7 643.3 million manats, and the budget expenses amounted to 1 584.3 million manats.

During the period of January-March 2023, the revenues of SOFAZ related to the implementation of oil and gas agreements are 5 596.0 million manats, including 4 829.9 million manats from oil and gas profits, bonus payments amounted to 765.3 million manats, transit revenues amounted to 0.8 million manats.

The revenues from managing SOFAZ’s assets for January-March 2023 amounted to 2 047.3 million manats.

The extra-budgetary revenues of SOFAZ amounted to 1 427.6 million manats due to the difference caused by the variation in exchange rates.

During the reporting period, 1576.0 million manats have been transferred to the state budget within the 2023 SOFAZ budget implementation framework. 1.2 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 2.0 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-March 2023, the expenses related to the management of SOFAZ amounted to 5.1 million manats.

Although the uptick in volatility observed in the financial markets in 2022 has also been reflected to a certain extent in the SOFAZ’s investment portfolio in the first quarter of 2023, an increase in positive sentiment in financial markets owing largely to the improvement in economic indicators as well as the strengthening expectations – induced by the decrease in the pace of rate hikes – that the Fed’s monetary policy will turn more dovish towards the end of the year has positively impacted the fund’s fixed income and equity portfolios. It should also be noted that the diversification achieved within the fund’s investment portfolio has enabled the fund to avert the potential losses that would have otherwise materialized in the face of recent banking turmoil in US and Switzerland while the stronger credit positioning of the fund’s fixed income sub-portfolio has boosted the portfolio’s profitability in March. Nevertheless, despite the positive tendency in some economic indicators of a number of developed countries, there is lingering uncertainty as to the future path of returns in the financial markets, largely due to the sticky inflation numbers that still surpass the central banks’ targets.

The aforementioned duo of investment and extra budgetary gains as well as the inflows from the sale of oil and gas that well exceeded the 3-month forecasts has resulted in an increase in the fund’s asset base.