The National Development Fund of Iran, the sovereign wealth fund, reiterated that it is expanding its investment activity, outlining key investment options and listing areas the fund must shun.
In a series of tweets, Mehdi Qazanfari, the NDFI chief, said the resources of the fund need to go into the manufacturing and services sectors.
In addition, the NDFI will play a more active role in the capital market along with investment in “international money and financial markets”.
Referring to the articles of association of the NDFI, Qazanfari earlier said the sovereign wealth fund is legally allowed to also invest in international markets.
The NDFI is interested in investing in projects that help bolster startups and products of knowledge-based companies.
Finally, the NDFI seeks to “concentrate on investment in infrastructure projects and sectors with high returns and low risks”.
Pointing to the limitations of the fund, Qazanfari earlier said that the “sovereign fund would do better to focus more on investment and less on lending”.
The CEO acknowledged that the fund had deviated from its mandate and must avoid practices that exhaust its financial resources.
On activities the fund must refrain from, the official pointed to using its money for plugging government budget deficits and for development projects enshrined in the budget.
In addition, banks must be banned from (mis)using money deposited by the NDFI for their banking operations. Likewise, the government should avoid approaching the NDFI for unforeseen needs.
Finally, Qazanfari pointed to its past role in state operations that compete with private enterprise, reiterating that the NDFI needs to earnestly avoid such economic spheres.
NDFI is independent of the government and was set up in 2011 to curb dependency on oil and save a percentage of the earnings from oil and gas exports for future generations.
The fund lends to nongovernment public sector, private firms and cooperatives in need when government revenues are low.
An estimated $136 billion was injected into the fund since its inception, about half in the first three years of its birth.
Due to shrinking oil revenues arising from the US sanctions, input into the fund has apparently declined and the government has been increasingly tapping into NDFI resources in recent years to plug its budget holes.
At a conference last week, Qazanfari said the government is the biggest borrower of the NDFI with arrears exceeding $60 billion, reiterating the need to save for the future generation.
To provide funding to the government, he proposed that it should be via the return on investment of the NDFI and not through rampant withdrawals and the persistent requests for loans.
“Governments must let us engage in economic activity and invest money and [after that] lend it from the profit instead of the principal financial resources.”
