The possibility of reducing the income of the State Oil Fund of the Republic of Azerbaijan

According to the report of the international group Tasnim news agency, the Accounting Chamber of the Republic of Azerbaijan has its opinion published about the future budget of the State Oil Fund (DNF).

Based on the indicators of the next year’s budget, 12 billion and 73 million manats will be collected in the National State Fund and 12 billion and 900 million manats It will cost. From the disclosed indicators, it is clear that next year’s income of the state oil fund will be much lower compared to this year’s expected income (18.8 billion manats). The current budget will be twice the revenues of this fund approved at the beginning of the year. The reason for the doubling of the fund’s expected income compared to the initial forecast is the higher than expected price of crude oil and also the increase in the percentage of profitability of the funds managed by the fund.

It should be considered that the increase in income The expected happened in a situation where the oil production in the Azeri-Cheragh-Gonsheli fields decreased, while it remained the same in the Shah Deniz gas field. Although the average price of oil in 2023 is predicted to be 60 dollars, this index was 78.6 dollars in the 9 months of this year.

How are the income and expenses of the fund formed?

According to the budget document of the State Oil Fund of the Republic of Azerbaijan, it is expected to be 8 billion and 146 million in the next year Manats (in the form of net revenues from the sale of hydrocarbons of the Republic of Azerbaijan) should enter the budget of this fund.

This means about 70% of the total income of the fund. It is expected that another 3 billion and 132 million manats, which are expected to enter the budget, will be provided by managing the credits of the state oil fund. Another 767 million manats are included in the fund’s budget in the form of bonus payments. For many years, the largest income of the state budget of Azerbaijan is the funds transferred from the state oil fund.

The state oil fund has predicted to deposit 12 billion and 781 million manats to the state budget next year. This means that approximately 35% of Azerbaijan’s 2024 budget revenues will be directly financed by the oil fund. Azerbaijan is nearly 50%. However, there is also the fact that if the price of oil is much higher than expected ($60) next year, the transfers of the oil fund to the budget may be reduced.

Another direction that is considered as a cost item in the state oil fund budget is the financing of educational programs for Azerbaijani citizens abroad. Next year, the State Oil Fund will spend 81 million manats on the education of students abroad in Azerbaijan. Another 38 million manats from the fund’s expenses will be used for the maintenance of this institution. /span>

The increase in the price of natural gas in the last two years has increased the share of natural gas in the export of Azerbaijan.

Before the budget indicators were prepared in the Republic of Azerbaijan, the predicted price per barrel of oil was announced and the next year’s budget was also prepared based on that forecast. In this regard, it should be noted that the opinion of the Accounting Chamber regarding the budget of the National Oil Fund also predicts the price of natural gas. Natural gas next year is calculated at $511. In other words, to have an idea of ​​the state and future of the economy of the Republic of Azerbaijan, one should pay attention not only to the price of oil, but also to the price of natural gas.

What will the price of oil be next year?

Since the energy sector is the basis of the economy of the Republic of Azerbaijan, the oil price forecast for Next year is important. So far, several international organizations have published their predictions of oil prices in 2024.

Goldman Sachs has the most predictions among the announced predictions. In the forecast published by the investment bank in September, the average price of a barrel of crude oil is predicted to be 100 dollars next year.

The International Monetary Fund (IMF) has the lowest forecast for the price Oil provided next year. In a forecast released in October, the International Monetary Fund predicted that the price of crude oil would be $79.90 next year. The World Bank forecast is $81, the European Central Bank forecast is $81.8, the US Energy Information Agency forecast is $94.9. During the preparation of next year’s budget, the average price of a barrel of oil in the Republic of Azerbaijan was calculated from 60 dollars.

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