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President Hassan Rouhani says the government had to deposit this sum at a time when it was grappling with unprecedented financial crisis as a result of declining oil revenues.
President Hassan Rouhani says the government had to deposit this sum at a time when it was grappling with unprecedented financial crisis as a result of declining oil revenues.

$40b Deposited in Wealth Fund Since 2013

As per the budget bill for the current Iranian year (March 2017-18), the government is tasked with depositing 30% of revenues earned from oil and gas exports to NDFI, up from 20% as per the budget law of the fiscal 2016-17
Approved NDFI withdrawals are far from what the government needs to cover the deficit that has forced it to drastically cut spending in both state bodies and infrastructure projects suffering from underdevelopment in the past few years

$40b Deposited in Wealth Fund Since 2013

Criticizing legal restrictions on the government’s access to Iran’s sovereign wealth fund, the National Development Fund of Iran, President Hassan Rouhani said his government has deposited $40 billion into the fund since he took office in August 2013.
He said the government had to deposit this sum at a time when it was grappling with unprecedented financial crisis as a result of diminished oil revenues over the past years.
“This is one of the wonders of history. We created the fund . . . to deposit [cash] when oil prices are high and to withdraw in days of hardship. But in hardship, we had to deposit again,” Rouhani was quoted as saying by SENA in a speech on Tuesday.
Iran enjoyed sky-high crude prices for a few years, adjusting its spending with high revenues. Oil revenues topped $110 billion in the Iranian year to March 2012 under the previous Iranian administration, but the bearish crude market pushed them down to $14-15 billion in the Iranian year ending on March 20, 2016.
Oil prices fell drastically in 2014, from over $100 per barrel to the record low of $30 in 2016.
Government revenues have seen the sharpest fall in history in recent years.
“We faced an unprecedented fall in the price of oil and we are still under pressure. The price fell from [its high of] $120 [before Rouhani took office] and it is now $44 [per barrel],” the president said.
“Falling oil prices have created challenges for all oil-rich countries.”
Iran’s abundant crude income during former president, Mahmoud Ahmadinejad’s eight-year term failed to benefit NDFI.
The wealth fund currently has $91 billion in reserves, according to Mohammad Hosseini who represents the parliament in the NDFI governing board.
The fund, which collects oil price windfalls for infrastructure investment, is dwarfed by sovereign wealth funds of Iran’s neighbors in the Persian Gulf periphery. The UAE had $792 billion and Saudi Arabia has $582 billion in their respective wealth funds in June 2016, according to the US-based Sovereign Wealth Fund Institute.
SWFI figures show more than $103 billion were withdrawn from the Saudi wealth fund during June 2015-16.
In Iran, however, as shortage of financial resources created a variety of challenges from stagnating industries to underdeveloped transport infrastructures, the government’s ability to withdraw from the fund has been unfairly limited.
In February, Rouhani slammed the parliament for tying the government’s hands on access to the wealth fund. He censured the lawmakers for their vote to increase the share of wealth fund savings from Iran’s oil and gas revenues.
As per the budget bill for the current Iranian year (March 2017-18), the government is tasked with depositing 30% of revenues earned from oil and gas exports to NDFI, up from 20% as per the budget law of the fiscal 2016-17.
However, the parliament has allowed the government to withdraw $2.3 billion from NDFI this year, more than 50% of which are to go to the defense sector.
The approved withdrawals are far from what the government needs to cover the deficit that has forced it to drastically cut spending in both state bodies and infrastructure projects suffering from underdevelopment in the past few years.
Iran’s budget deficit for the last fiscal year (March 2016-17) amounted to $7.62 billion, according to the latest data released by the Central Bank of Iran.
The deficits faced by the government in successive years over the past years have forced it to cut down spending associated with the expenditures of ministries and their affiliated bodies.
Investment in development projects was also drastically cut. The government only met 58%, 68% and 39% of its projected development spending during 2015-16, 2014-15 and 2013-14 respectively.

 

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