Baku. 31 March. REPORT.AZ/ $ 0.9 billion off-budget expenditures of the State Oil Fund of Azerbaijan (SOFAZ) occurred due to the exchange rate difference as a result of cheapening of currencies included in investment portfolio in 2016.
Analytical Group of Report believes that rate of a number of foreign currencies in the currency portfolio of SOFAZ, which caused a loss to the fund due to exchange rate differences, is likely will not recover its previous level. Among them are Turkish lira and Russian ruble. That is to say, decisions to invest in these currencies were erroneous from the very beginning.
"If SOFAZ left oil revenues untouchable, it would prevent a loss of $ 0.9 billion. The purpose of the oil fund is to react quickly and flexibly to market processes, as well to give the correct assessment of possible changes and trends and their long-term forecasting. Investment policy of the fund is forming on these forecasts", say analysts.
Earlier, the fund could not predict the cheapening of euro and pound sterling, as a result of which its portfolio fell by several billion dollars. "Each time this was represented as a long-term conservative policy of the fund, but it should be noted that if the fund pursued a more flexible policy, it would be able to earn several billion dollars only by reducing investments in euros and pound sterling. It would have additional financial support for Azerbaijan", the experts said.
According to the analysts, another point is related with the growth in share of investments in in the fund's shares investment portfolio from 10% to 15%. The period of recession in the world economy, as well as redirection of capital from the bond market to bonds as a result of the interest rate’s raising in the US, creates a need to postpone this decision at this stage, as stock market is expected to fall seriously in coming years.