The State Oil Fund of the Republic of Azerbaijan (SOFAZ) reports that on September 30, 2023, SOFAZ assets increased by 13% compared to the beginning of 2023 (49 033.6 million US dollars) and amounted to 55 524.0 million US dollars.

During the period of January-September 2023, the budget revenues of SOFAZ amounted to 14 878.3 million manats, and the budget expenses amounted to 3 587.0 million manats.

During the period of January-September 2023, the revenues of SOFAZ related to the implementation of oil and gas agreements are 12 227.2 million manats, including 11 422.1 million manats from oil and gas profits, bonus payments amounted to 800.7 million manats, transit revenues amounted to 0.8 million manats, acre account payments amounted 3.6 million manats.

The revenues from managing SOFAZ’s assets for January-September 2023 amounted to 2 651.1 million manats.

During the reporting period, 3 550.0 million manats have been transferred to the state budget within the 2023 SOFAZ budget implementation framework. 10.8 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 6.1 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-September 2023, the expenses related to the management of SOFAZ amounted to 20.1 million manats.

The extra-budgetary expenses of SOFAZ amounted to 257.8 million manats due to the difference caused by the variation in exchange rates.

The increase in assets during the third quarter of 2023 can be attributed to the surplus of budget revenues over expenses, which includes the revenues generated from fund management. While there has been economic recovery since the beginning of the year, the continuation of a strict monetary policy by major developed countries has raised concerns about a potential economic slowdown. Despite the strong returns in equity markets during this period, with developed market index showing 11.6% return over 9 months, the downside risks have increased due to economic contraction expectations.

Simultaneously, the persistence of an inflation rate that exceeds the targeted rates established by leading central banks, along with a robust labor market, suggests that interest rates are likely to remain high for a more extended period than initially anticipated. On the fixed income side, yields have continued to rise throughout the year, which has put pressure on bond returns.

Looking ahead, the persistently tight financial conditions pose a risk to corporate bonds and equities, as companies are compelled to refinance existing debt at higher rates, potentially dampening profitability and increasing financial strain.