The Expediency Council has approved changes in the articles of association of the National Development Fund of Iran, the sovereign wealth fund.
The council is a top state body responsible for resolving legislative disputes between state and government organizations.
Changes to the articles of association of the fund cover a range of issues, namely its share of government revenue from oil and gas export and management of its financial resources, the NDFI website reported.
NDFI is independent of the government. It was founded in 2011 to curb dependency on oil and save a percentage of government earnings from energy exports for future generations.
The fund lends to nongovernment public sector, private firms and cooperatives in need when government revenues are low.
Based on the new provisions, the government must deposit 42% of its annual revenue from selling oil and gas with the NDFI, starting from beginning of the Seventh Five-Year Economic Development Plan.
NDFI quota is supposed to increase 2 percentage points annually in the subsequent years of the development plan.
The sixth plan ended last year and the Plan and Budget Organization is working on the next long-term roadmap.
Share of the national fund from oil revenue was set at 20% in the first year of its inception in 2011 and was supposed to increase by 3 percentage points each year. Successive administrations in the past have refused to increase the NDFI pie. Annual increase in NDFI quota is based on the provisions the sixth plan.
New provisions give the NDFI extra leeway to spend its financial resources and allow it to become financially more independent from obligations of the governemnt’s fiscal budgets.
Furthermore, under the new rules, the sovereign fund can set up a financial institution of its own to function in accordance with its own mandate.
Such an institution would not be allowed to branch out, take deposits or issue money as regular banks and credit institutions do. It will only focus on the financial aspects of the NDFI.
Accordingly, the Central Bank of Iran is no longer in charge of managing NDFI accounts, which will be taken care of by the sovereign fund itself.
Last but not the least, authority has been given to the NDFI to expand its investment arm in and outside Iran. Investment options include funding development and infrastructure projects prone to yield high returns with low risk.
In addition, the NDFI must play an active role in the domestic capital market and in the international money and financial markets.
Earlier, Mehdi Qazanfari, managing director of the national fund acknowledged that the fund has deviated from its mandate and should avoid policies and practices that hurt its finances.
