SOFAZ Shares Data on Assets and Budget

The State Oil Fund of the Republic of Azerbaijan (SOFAZ) reported a 10% increase in assets for January-September 2024, reaching $61.698 billion, with assets growing by $1 billion in September, according to the chart.

SOFAZ’s currency portfolio amounts to $61.19 billion, with 67% in dollar-denominated assets (compared to 67.5% at the beginning of the year), 20.3% in euro assets (down from 21.2%), 5.1% in British pounds (down from 5.3%), 2.6% in Chinese yuan, 1.4% in Japanese yen, and the remainder in other currencies.

According to SOFAZ, it increased its gold purchases, with the share of gold in its assets rising to 17.7% from 12% at the start of 2024.

As of October 1, SOFAZ’s geographic distribution of assets is as follows: 33.1% in North America (up from 32.7% at the start of the year), 30.1% in Europe (down from 30.5%), and a reduced interest in Asia, where 10.8% of SOFAZ’s currency assets are held (compared to 14.8% at the start of the year).

Thus, 66.2% of assets are placed in developed countries (an increase of 1.4%), 9% in developing countries (down by 5.4%), and 7.1% in international financial institutions (down by 1.7%).

Regarding the bond portfolio and other money market instruments (stocks and other securities), 31.3% of funds are held in long-term financial instruments (up from 27.6%), and 29.3% in short-term securities (1-3 year period) compared to 26% at the start of the year.

A significant reduction is noted in assets held in securities with maturities of one year—currently 13.1%, down from 24% at the start of the year.

It seems that SOFAZ is avoiding risky operations and has returned to a traditional approach to asset placement, as indicated by the growth in gold and long-term securities.

As for SOFAZ's budget for January-September 2024, SOFAZ’s revenues amounted to 15.004 billion manats, while expenditures totaled 9.635 billion manats.

Of the total revenue, 9.424 billion manats came from oil and gas agreements, including 8.64 billion manats from the sale of oil and gas on the world market. Bonus payments contributed 778.2 million manats, and transit revenues amounted to 0.5 million manats.

“Investment income from SOFAZ’s asset management for the first nine months of the current year amounted to 5.58 billion manats,” the Fund reported.

As part of its obligations to the state budget, SOFAZ transferred almost 9.6 billion manats (a transfer to the budget’s revenue via currency auctions of the Central Bank).

18 million manats were allocated for the "State Program to Improve the International Competitiveness of the Higher Education System of Azerbaijan for 2019-2023," and 10.8 million manats for the "State Program on Youth Education in Prestigious Foreign Universities for 2022-2026."

SOFAZ’s operating expenses for January-September 2024 amounted to 19.9 million manats, and the Fund’s off-budget income reached nearly 4.2 million manats (generated from exchange rate differences).

“Equity investments continued to be the main driver of SOFAZ’s investment returns. As central banks around the world lowered interest rates amid stabilizing inflation, government bond yields decreased. However, major indices grew as economies stabilized, and investors were encouraged by the prospect of reduced pressure on the economy from persistently high borrowing costs, benefiting sectors such as technology and consumer goods,” SOFAZ explained its asset portfolio reallocation.

It is worth noting that SOFAZ has been operating since December 1999, accumulating revenues from Azerbaijan’s international oil and gas agreements.