EghtesadOnline: The National Development Fund of Iran, the sovereign wealth fund, plans to lend $10 billion in foreign currency for private sector projects in the current fiscal (March 2019-20).
The vice president of NDFI, Alireza Saleh, said interest rate for forex loans is 3.5%, which is comparatively lower than rates normally charged by banks in Iran, IRNA reported.
Pointing to the rules governing the sovereign wealth fund, Saleh said as per law, 80% of NDFI resources should be used to fund private sector projects with non-governmental public entities allowed to use 20% of the loans.
He noted that the 30% of annual oil export revenues are allocated to NDFI, which is used to finance the private sector, according to Financial Tribune.
However, NDFI share from oil export revenues has been curtailed in this fiscal due to decline in crude oil exports after the United States new sanctions last year.
The legislature in February agreed to cut NDFI’s share from annual oil revenues to 20% in the current fiscal, down from 32% a year earlier.
This is while based on the Sixth Five-Year Economic Development Plan for the current fiscal, 34% of the oil revenues should be allocated to the sovereign wealth fund.
According to a report published on the NDFI website, the fund lent 110 trillion rials ($800 million) during the previous fiscal (March 2018-19) as per the provisions of Article 52 of the Government Financial Regulations Law.
Law obliges NDFI to allocate 20% of its resources to cooperatives, private sector, and non-government public companies in order to fund technically, financially, and environmentally viable projects.
Half of the funds should be used to finance agricultural projects and the other half for mineral and industrial sectors.
NDFI allocated $5.1 billion to private sector projects within agency contracts with banking system in the previous fiscal.
The fund also paid $7 billion for national schemes, including controlling border waters and supplying water to the deprived regions.
In addition, NDFI allocated 52 trillion rials ($358 million) as per the law on Supporting Sustainable Development and Employment in Rural Areas.
According to law, the funds are to be provided for non-government projects as well as for working capital of production centers in rural areas and cities with a population below 10,000.
The NDFI was founded in 2011 to save a percentage of earnings from oil and gas exports for the welfare of future generations.