Policy of SOFAZ Is Example to Other Budget Organizations - Gubad Ibadoglu

In the first nine months of 2016, positive trends in SOFAZ activities were noted, the expert Gubad Ibadoglu said.

In his profile on Facebook the expert noted it is necessary to evaluate positively the fact of a significant increase in income from the management of the Fund’s assets and currency, as well as a sharp reduction in the costs.

"Analysis of the State Oil Fund information shows that the extra-budgetary income from changes in exchange rates in the first nine months amounted to 2.6 billion manats. At the same time, the growth of the Fund's assets amounted to 2.3 billion dollars," the economist said.

Ibadoglu said the currency basket of SOFAZ's assets consists of 12 different world currencies - 47.6% in US dollars, 35.3% in euros, 5.3% in manats, 4.9% in the British pound, 3.8 % in gold, 1.5% in the Russian ruble, 1.4% in the Chinese yuan, 1.3% in the Korean vone, 1.2% in Turkish lira, 1.1% in Japanese yen, 0.6% in Australia dollar and other currencies.

68.6% of the Fund's assets are located in developed countries, 28.8% in developing countries, and 2.6% in international financial institutions.

Geography of the investment portfolio also shows that 41.6% is in Europe, 27.3% in Asia, 24.1% in the US, 3.9% in Australia and 0.5% in other regions.

Currently, 79.3% of the Fund is invested at a very low percentage (1%) in the stable revenue bonds and cash instruments, 11.6% in stocks, 5.3% in property, and 3.8% in gold. "For the first nine months of 2016 the income from the Fund asset management amounted to 734.8 million manats, which in manat terms is 15 times and in dollar terms is 10 times more than in the same period last year," wrote Ibadoglu.

The expert stressed that the positive changes in the current policy of the State Oil Fund are not characterized only by the growth of revenues from asset and fund management. At the same time there is rationalization of the Fund's expenses.

"In 2016 the state budget has been transferred 3.26 million manats, which is 42.3% less compared to the previous year and amounts to only 47.2% of the forecast for the current year," the economist said.

According to him, the State Oil Fund in a difficult economic and financial situation has made quite a positive result.

“The significant growth in revenues from asset and currency management and the sharp decline in spending show correct management and rationalization of costs. This practice should be evaluated positively and should be set as an example to other budget organizations," said Ibadoglu. ----71B