The National Development Fund of Iran, the sovereign wealth fund, will inject fresh funds into the Capital Market Stabilization Fund (CMSF) in the coming weeks, the CMSF chief said.
Amir Mahdi Saba’ie said the NDFI would deposit 100 trillion rials ($370 million) into the fund to help revive the struggling share market, IRNA reported.
The payment is in line with a support package announced by the government last year. In late 2020, the former government allowed the NDFI to inject $200 million in the CMSF. At the time, only 10 trillion rials (equivalent to $40 million at then exchange rates) was deposited and the balance was supposed to be paid in phases but never was.
“The payment will be made in a timely manner to help the fund mitigate investment risks in the bourse,” the official was quoted as saying. The move comes in the wake of deep decline in the share market in recent months.
The CMSF was created in 2017 to help resolve the credit crunch in the bourse with the mandate to support the market and help safeguard the interest of investors.
Referring to the articles of the association of CMSF, Saba’ie said three main sources normally feed the stabilization fund, namely direct government investment that must be envisioned in the national budget.
As a second way, he pointed to rules based on which the NDFI should invest 1% of its resources in the CMSF. This money is reportedly a loan at 12% to be repaid in five years and the maturity date can be extended. The CMSF is responsible for paying the principal plus interest.
Independent of the government, the NDFI was founded to save a portion of oil and gas export revenue for future generations. Like all wealth funds, it lends to both public and private firms in need.
Finally, a segment of the income from trading fees imposed by the Tehran Stock Exchange and the junior exchange Iran Fara Bourse are deposited with the fund regularly. As per rules, 30% of the income from stock trade fees is deposited with the CMSF.
In the 2022-23 budget, the stabilization fund is forecast to receive 300 trillion rials ($1.1 billion) from various sources, the official said.
As per support measures recently announced by the government, all income from tax on share trade will be wholly injected into the CMSF next year.
The next budget projects that the government would earn 104.2 trillion rials ($390 million) from tax on share trade.
