The National Development Fund of Iran (NDFI) last week recessed its financial statement showing the sovereign wealth fund among the largest in the world according to the Global SWF ranking.
It said assets under its management (AuM) is $139 billion, including $110 billion in loans and $29 billion in cash. The Global SWF website described the release of these figures a matter of surprise and “a secret the international press had long wondered about”.
According to Global SWF ranking, that makes NDFI the 17th largest in the world.
Iran is in dire straits, the report said, but the government keeps trying to get back to the 2015 nuclear deal that relieved for a short time some of the financial restrictions imposed by the US.
After the US walked out of the historic pact in 2018, the country’s economy has shrunk, inflation has increased dramatically and the fiscal deficit has widened further.
Yet, the SWF has been able to survive due to the strict fiscal rules imposed at inception in 2011. Learning from the pitfalls of its predecessor the Oil Stabilization Fund (OSF), the NDFI was designed to receive up to 32% of oil revenues and not be used for budget deficits.
After the Covid pandemic hit, the government managed to use a few billion dollars to rescue the Tehran Stock Exchange, but the SWF grew after oil prices increased.
On May 17, NDFI held its second forum. Since then, there have been some important changes. For instance, there will be no further withdrawal until loans given to the government are repaid; the fund may change its name and nature from “Development” to “Savings”; and it will start investment in domestic and international equities, with the aim of increasing the rate of return.
Now, this is not the first time the NDFI wants to invest overseas and collaborate with international financial bodies. In 2019, it signed MoUs with foreign investors, including Italy’s CDP Equity, Kazakhstan’s Baiterek Holdings and Korean ExIm Bank.
It was also a member of the International Forum of Sovereign Wealth Funds (IFSWF) for years and it published the Santiago Principles Self-Assessments in 2016 and 2019.
However, this time it could achieve its goals given the sheer size of its finances plus relative independence from the government.
Working alongside Global SWF, the fund is in the process of publishing more information on its website to improve its governance, sustainability and resilience.
