Azerbaijan aims to reduce SOFAZ transfers to state budget Investment
IIKSS - The share of transfers of the State Oil Fund of Azerbaijan (SOFAZ) to the country’s state budget has to be reduced to 15 percent until 2025, according to the Strategic Road Map for the Azerbaijani National Economy Prospects published Dec. 9.
The strategy reads that every second manat spent in Azerbaijan’s public sector is funded by SOFAZ.
“Transfers of SOFAZ to the state budget are closely related to its revenues, that is, the oil prices,” the text of the strategy reads. “It is one of the main causes of serious dependence of Azerbaijan’s economy on changes in oil prices. A stable growth rate is required in Azerbaijan’s economy for private investments share to increase, and this requires reduction of SOFAZ transfers to the state budget.”
If transfers of SOFAZ to Azerbaijan’s state budget amounted to only 5.9 billion manats in 2010, the volume of transfers reached its maximum level of 11.4 billion manats in 2013, according to the data indicated in the strategy. But starting from 2014, the volume of transfers began to gradually decrease and amounted to 8.1 billion manats in 2015, the strategy reads.
This year, transfers of SOFAZ to the state budget are provided in the amount of 7.615 billion manats, while they are provided at the level of 6.1 billion manats in the draft state budget for the next year, which is by 1.515 billion manats (19.9 percent) less than in 2016.
SOFAZ was established in 1999 with assets of $271 million.
Based on SOFAZ’s regulations, its funds may be used for construction and reconstruction of strategically important infrastructure facilities, as well as solving important national problems.
The main goals of the State Oil Fund are accumulation of resources and placement of the Fund’s assets abroad in order to minimize the negative effect on the economy, prevention of "Dutch disease" to some extent, promotion of resource accumulation for future generations, and supporting current social and economic processes in Azerbaijan.