DEFINITION of 'State Oil Fund (Azerbaijan)'
A sovereign wealth fund established by the Republic of Azerbaijan. The State Oil Funds' source of deposits is primarily surplus revenues from the development of oil reserves in Azerbaijan.
BREAKING DOWN 'State Oil Fund (Azerbaijan)'
According to the State Oil Fund's 2008 Annual Report, oil production accounted for 54% of Azerbaijan's GDP. This highlights the reliance that the Republic of Azerbaijan has on oil production as a source of prosperity. In order to help diversify the Azerbaijani economy, the primary purpose of the State Oil Fund is to preserve the wealth derived from this oil production and to invest in public infrastructure and the local non-oil economy. The fund is invested very conservatively, and its performance benchmark is the three-month LIBOR interest rate.