Economy, Business And Markets

Development Fund Reserves Exceed $70b

Development Fund  Reserves Exceed $70b
Development Fund  Reserves Exceed $70b

The reserves of the National Development Fund of Iran (NDFI) now stands at $70 billion, announced the deputy of the fund on Thursday after a large span of time that no official provided information on the fund. The official, however, underlined that they still need to learn how to allocate the fund's resources.   

As the country was suffering from tough economic conditions in the past years due to the western sanctions, the fund could easily fill the gap created by the absence of foreign investors, Mohammad Ghasemi said addressing the first conference held on the approaches towards "resistance economy" on November 20-21 in Mashhad.       

The Resistance Economy is referred to the guidelines outlined by Ayatollah Seyed Ali Khamenei, the Leader of the Islamic Republic, to help the country be less dependent on oil revenues.

Ghasemi said despite the good experience Iran had on managing the fund it should also benefit from the experience of other oil-rich countries to see how they make use of their sovereign wealth funds (SVF). “They have enough to teach such nations as Iran. They do not spend the revenue of their oil on current expenses like paying cash to citizens.”

He was referring to a subsidy reform plan that provides almost every Iranian citizen with a monthly handout of nearly $15. The handout constitutes a minor part of a typical household expenditure but yet no citizen was ready to voluntarily withdraw from the scheme.

“Norway, for example, has become one of the wealthiest countries in the world because it mainly refuses to spend its huge oil revenues.

Instead, it places the revenues in a sovereign wealth fund,” Ghasemi noted.

Norway’s sovereign wealth fund, the biggest of its kind in the world, has “a budget of $950 billion,” he said.

The official mentioned Kuwait as another successful experiment, which has established a sovereign fund for over 60 years.  

Kuwait Investment Authority, which as of February 2014 was ranked 6th in the globe according to the SWF institute, has a budget of $530 billion.

China and Russia respectively have three and two similar funds which serve the same function, Ghasemi said.

When it comes to our country, however, the revenue of oil sales has not been either saved or spent in a proper way until recently, he said.

“As soon as oil was discovered and exploited in Iran, its revenues have mainly been spent on a variety of purposes by different governments,” he added, regretting the fact that oil revenues had neither been saved nor appropriately consumed in the country before the sanctions were imposed on Iran.

However, in recent years, he said, “The process has been improved in light of the Leader’s advices, on the Resistance Economy, asserted the official.