Vol. 2 (2025)
Articles

Natural Resource Fund (NRF) in a Developing Society: Insights from the State Oil Fund of Azerbaijan (SOFAZ)

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  • Teymur Khalafov
Teymur Khalafov
University of Glasgow, United Kingdom
Bio
DOI: https://doi.org/10.36253/asiac-3645

Published 2025-11-10

Keywords

  • Natural Resource Fund (NRF),
  • Azerbaijan,
  • resource revenues management,
  • economic policy,
  • transparency

How to Cite

Khalafov, T. (2025). Natural Resource Fund (NRF) in a Developing Society: Insights from the State Oil Fund of Azerbaijan (SOFAZ). ASIAC – Studies on Central Asia and the Caucasus (SCC), 2, 139–164. https://doi.org/10.36253/asiac-3645

Copyright (c) 2025 Teymur Khalafov

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

This paper examines the State Oil Fund of Azerbaijan (SOFAZ), analysing its evolution and performance as a Natural Resource Fund (NRF) in an institutionally developing society. The analysis highlights SOFAZ’s initial challenges in curbing overspending of oil revenues, attributed to weak oversight and socio-economic pressures. The 2015 oil price decline prompted the government to shift its strategy by focusing on reducing budget transfers from SOFAZ, a goal that was achieved to a certain degree. The paper examines the role of transparency and the public availability of financial information about the fund as political incentives in this shift. However, it cautions that such transparency should not be equated with full public accountability, especially since significant economic challenges remain. While SOFAZ’s transparency measures have contributed to its relative stability, the fund’s long-term sustainability depends on continued efforts to reduce budget transfers from the fund. As Azerbaijan navigates its transition to a post-oil economy, the future of SOFAZ’s accumulated assets hinges on maintaining these policy shifts.

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