The National Development Fund of Iran can provide the country’s budget from profits on its investments albeit if the sovereign wealth fund gets the entire oil export revenue and sets its sights on high value-added, according to NDFI head of board of directors.
“To fact-check this claim, I propose the government and the Oil Ministry entrust the NDFI with some of their oil/gas fields. By doing so, they will not only have settled their debt to the fund, but also test the fund and see how it invests in and profits from upstream energy sectors,” Mehdi Ghazanfari was quoted by IBENA as saying.
Under such circumstances the NDFI and the nation will have much to gain in that the fund will cooperate with other economic sectors and private enterprise to achieve lofty national goals, Ghazanfari said.
The NDFI’s primary mission is to underpin economic development and help all those geared to such goals, he added.
“The norm is that wealth funds across continents are focused on investment in and outside the country. This is why they expand become richer. We must follow suit. If the NDFI expands domestic and foreign investments, and strengthens its financial and monetary clout, it will undeniably have the opportunity to grow.”
The NDFI is independent of the government and was set up to curb dependency on oil and save a part of the earnings from energy exports for future generations. The fund recently said that it will focus more on investment and less on lending. Its board of directors earlier in the year gave the go-ahead to broaden its investment scope.
Granting loans, Ghazanfari said, is one of the effective instruments the NDFI uses to achieve its goals. The fund lends to the nongovernment public sector, private firms and cooperatives in need when government revenues are low.
Major Constraint
“Unpaid debts are a hindrance we face. Money given to production units and development projects must be repaid to be able to help other ventures and production chains. When resources are tied up in few projects for long it not only hurts the fund but also the country’s development agenda. Obviously this is in total contradiction with the founding principles of the fund.”
Up until recently, repayment of billions in forex loans taken years ago was a hot button issue among private companies and the NDFI.
Earlier, the fund said it was able to collect $5.5 billion from the $7 billion unpaid by borrowers. “Now that almost 75% of the debt has been repaid, we are focusing on power plants to get back the amounts they borrowed,” Ghazanfari said.
He was hopeful that the unpaid debt would decline below $500 million before the yearend in March.
NDFI is the country’s sole forex fund, he recalled. “We want a share in all megaprojects from oil and petrochemicals to minerals, water, agriculture...”
Ghazanfari urged senior bankers to define an insurance system to cushion the impact of forex rate increases in collaboration with the Central Insurance company of Iran. He noted that both the “borrowers and the fund should not be saddled with the endless risk of currency rate fluctuations” in the chaotic domestic market.
Earlier in the month the NDFI deputy chief for legal and parliamentary affairs said that the fund will resort to stringent measures, namely block bank accounts and seize property of companies/banks unable or unwilling to repay past loans.
“Debt repayment has improved in the recent past. However, due to the economic and forex conditions some banks and companies are not settling their loans. Therefore, the NDFI has decided to approach legal channels,” Fardad Amir Eskandari said.
The accounts of banks with the CBI whose customers have borrowed from the NDFI and are not repaying will be blocked and assets seized, he said, adding that if that does not suffice the fund will seize the shares of banks, borrowers and guarantors…and if necessary their collateral.
