The Economy Minister Ehsan Khandouzi says the government wants to create a “development bank” in the next five-year development plan period.
In an interview with Fars News Agency, Khandouzi pointed to the absence of “independent institutions” specializing in funding major development projects, reiterating the dire need to fill the gap.
“Lack of institutions specialized in funding megaprojects is a key issue simply because such institutions are crucial for attracting investment,” he was quoted as saying.
He proposed the idea of setting up the bank in harmony with the National Development Fund of Iran, noting that the plan is compatible with the mandate of the sovereign fund.
He pointed to recent changes in the NDFI articles of associations, saying that it paves the way for setting up a special development bank.
Under the new NDFI rules approved earlier in July, the wealth fund can set up a financial institution of its own to function in accordance with its declared mandate.
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.
The idea of launching a specialized development bank is reportedly enshrined in the next Five-Year Economic Development Plan.
The Seventh FYDP is being drafted by the Planning and Budget Organization. Five-year development plans are prepared by governments to help achieve decent and sustainable growth. The sixth ended last year.
Apart from government’s efforts to set up the development bank, the Majlis too is preparing legislation to this end.
The matter is included in the new banking bill, known as the Comprehensive Banking Law” being debated in the parliament.
As part of the bill, the CBI on behalf of the government is obliged to open a development bank, an issue that is a major point of contention between the Central Bank of Iran and lawmakers.
Opponents say the provisions of the bill that call for the founding the bank are at odds with CBI independence. This part of the bill has also been criticized for ambiguities surrounding the structure of the proposed bank and the source of its funding.
From what is known, the bank is ostensibly planned to be a CBI affiliate to be managed by a board of trustees headed by the head of the government (president). Other members would be the minister of economy, head of the Plan and Budget Organization and the CBI governor.
The new bank will have two major tasks, namely offering long-term credit for development plans and supporting specialized development banks via easy loans for manufactures.
