Tuesday, April 25, 2023
The essence of the National Development Fund's charter is a commitment to future generations The essence of the National Development Fund's charter is a commitment to future generations
By kangarloo-a @ 7:07 AM :: 159 Views :: 0 Comments :: Article Rating :: News

The Chairman of the National Development Fund, Mehdi Ghazanfari, recently shed light on the organization's functions and missions during an appearance on the television program "Safe-Aval" as reported by the National Development Fund's Public Relations department.

 

The Durability of Resources and the Role of Wealth Funds in the World

 

At the beginning of the interview, Ghazanfari explained the fund's differences and similarities compared to similar funds worldwide. He noted that while the correct term for these funds globally is "Sovereign Wealth Funds," Iran's fund was named the National Development Fund when it was established 12 years ago due to specific reasons. Ghazanfari clarified that the purpose of a Sovereign Wealth Fund is to manage and invest surplus national income, transforming it into long-term assets that can benefit future generations.

He added that national surplus income is typically generated through three main channels. Firstly, in countries with abundant oil reserves, surplus income is generated by selling oil during profitable periods, which is then collected and placed in a fund. Second, some countries have surplus sales of essential commodities like iron and agricultural products that are saved in a fund for future use. Finally, China and Hong Kong generally have surplus commercial sales of consumer and manufactured goods. These three sources of income have resulted in the establishment national wealth funds in approximately 79 countries worldwide. Some countries have multiple wealth funds, where surplus resources from the previously mentioned incomes are collected and converted into long-term capital and wealth. These wealth funds have a combined capital of more than 11 trillion dollars, enabling significant global economic movements.

 

The most successful cases in the world

 

In another segment of this program, the head of Iran's National Development Fund emphasized the successful funds in the world when asked about the most successful funds at present. He highlighted Norway's sovereign wealth fund as a successful model worldwide, with assets close to $1.4 trillion. Recently, the United Arab Emirates sovereign wealth fund has also approached this figure, and China's fund is also pursuing these two funds. Norway's fund has been highly regarded for its governance structure, leadership in investment, and as a model for portfolio diversification, and it is widely recognized as a successful fund in the world.

 

Is the National Development Fund of Iran successful?

 

In a television program, the performance of the National Development Fund of Iran was questioned, asking whether it was a successful fund. The head of the fund responded by stating that the fund has had good performance in terms of receiving resources. According to the general laws and the budget law, 20%, 30%, and currently 40% of the proceeds from the sale of oil and gas have been allocated to the fund. Therefore, the fund has been successful in this regard, as its resources have increased to $145 billion despite difficult economic conditions over the past ten years. However, around $100 billion of these resources have been withdrawn by governments themselves, which is contrary to the charter. In other words, legal withdrawals have been made contrary to the charter. According to the charter, governments are not allowed to withdraw from the resources of the National Development Fund, but they obtain permission for withdrawal at different times and under other circumstances, which becomes a violation of the charter but is legal.

He added: At present, a substantial share of the National Development Fund's investments has been allocated to the oil, gas, and petrochemical sectors, which have proven to be successful ventures. The fund's assets have facilitated the production and supply of refined petroleum and petrochemical products, including gasoline, among others. It is imperative that the fund's resources are replenished accordingly. The National Development Fund's presence as a financier for diverse projects has had far-reaching, significant effects on Iran's economy, including advancing developmental initiatives and attaining self-sufficiency.

 

National Development Fund resources are capital, not wealth

 

Mehdi Ghazanfari, the head of the National Development Fund, summarized his views as follows: overall, it must be said that the resources we gain from the sale of natural resources such as oil and gas are indeed capital, not wealth. We must use these capital resources to generate income and then spend the resulting income as wealth. Ghazanfari referred to the short historical time for using fossil fuel reserves, especially in joint fields. He also announced that the fund is ready to invest in oil and gas fields for the country to achieve more foreign exchange and repay the fund's debts from the government, taking important steps toward the country's development.