National Development Fund of Iran says the Seventh Five-Year Economic Development Plan provides an opportune time to address the shortcomings of the sovereign fund and offer feasible targets.
Fardad Amir Eskandari, the legal and parliamentary deputy of the NDFI, discussed its ills and possible solutions to be incorporated in the new national development plan, namely related to financial resources and foreign investments in a talk with the NDFI website.
When asked about proposals to overcome the fund’s challenges and draw on the opportunities in the seventh plan, Amir Eskandari emphasized the need for a clear mechanism to collect past loans given to the government beyond the existing framework and annual budgetary laws, without subjecting the government to added pressure to repay the billions in unpaid debt.
“It is worth noting that the current debt of the government to the NDFI amounts to twice the total budget of the government in the year 2023-24.”
The official suggested that it is not feasible to get repaid by the government solely based on its limited revenues amounting to $100 billion, which represents two-thirds of the fund's assets.
“Instead, the fund should be allowed to invest in major projects, so that the government’s debts to the fund will be settled using the returns on investments.”
Eskandari added that due to international sanctions, foreign investment is not feasible, and the country is in dire need of domestic investment. “Restrictions over fund's domestic investments should be lifted. In other words, by imposing restrictions on domestic investments, we unintentionally add to the international sanctions that have blocked foreign investment”, he noted.
“Although our current articles of association do not explicitly prohibit domestic investment, some believe that clarity is paramount. However, this does not mean not providing funds loans] to the private sector as long as it is at reasonable rates, in feasible projects and with sufficient guarantees and assurances”.
Eskandari emphasized the need for tax exemptions for the fund. “When profits are not distributed and considered as part of the fund's resources, paying tax simply does not make sense. While tax exemptions have been acknowledged by both tax authorities and the judiciary, a law is a must to permanently resolve this issue.”
The official also said that the fund should be exempt from legal expenses similar to other executive bodies and non-governmental public institutions.
He proposed that the resources and revenues from expropriations, including mines that are part of non-renewable assets belonging to future generations, such as oil and gas, should be given to the NDFI. “This would ensure that at least a part of the revenue from the confiscated assets is allocated to the fund.”
