Chairman of the National Development Fund of Iran Safdar Hosseini said the fund’s officials are eager to collaborate with other national wealth funds across the world, a move he hopes can help attract more foreign investment.
As an example, he said, NDFI officials are now ready to cooperate with the Norwegian sovereign wealth fund.
“We should take advantage of the Norwegian expertise in running their SWF since it is the largest of its kind in the world,” he said in a meeting with Norwegian Ambassador to Tehran Aud Lise Norheim, as reported by Financial Tribune sister news website Eghtesad News earlier this week.
He also highlighted the role of the NDFI as a fund that could help build the next generations’ future.
In an earlier interview with Tejarat Farda magazine, the chairman expressed concern about the administration’s excessive use of the fund’s resources
The former economy minister supported the idea of having an independent sovereign wealth fund so that the financial resources could be managed more efficiently.
Both former and incumbent administrations have used the NDFI for implementing national and provincial projects in recent years, given the economic sanctions which have restricted investment inflows.
Problems Need to Be Tackled
The NDFI, founded in 2011 to supplement the already existing Oil Stabilization Fund, is independent of the government’s budget. However, the OSF was originally designed to support the national budget if oil prices fall perilously low. Iran’s budget is heavily reliant on oil revenues.
Under Article 84 of the Fifth Five-Year Economic Development Plan (March 2011–March 2016), 20 percent of oil income is to be deposited in the NFDI, and the figure had to be increased 3 percent annually, an initiative aimed at transferring the majority of oil revenues to the sovereign wealth fund. However, the law has been neglected in the past years. The administration still deposits only 20 percent of its oil revenue in the fund.
Hosseini criticized this trend, saying: “The authorities have turned a blind eye to the recommendations by NDFI’s officials, leaving the fund with an $8 billion deficit.”
The NDFI is originally aimed at using its resources to support the private sector and development projects, but the government uses the resources to finance its budget deficit, when oil prices plunge in the international markets. That means the OSF has failed so far to help finance the national deficit.
Tighter Supervision
Earlier this week, a member of parliament called for tighter supervision of financial resources.
Citing Mohammad Ali Abdollah-Zadeh, ISNA said authorities must outline a comprehensive post-sanction plan as billions of dollars in Iran’s blocked assets will be released if the sanctions already weighing on the economy are removed.
Iran has been under sanctions over a nuclear dispute with the West, but a deal is likely to be achieved in a few months, if nuclear talks between Tehran and six world powers, known as the P5+1, prove successful. The deal can put an end to all nuclear-sanctions imposed in recent years by the UN, US, and EU.
The MP believes that to overcome the economic woes, the reliance of the government budget on oil revenues should first be reduced. “And the NDFI’s resources must be spent only on highly-efficient projects.”
The lawmaker also blamed the parliament decision on passing a law to decrease the share of the NDFI from oil revenues from 32 percent to 20 percent in the current national budget.
