€2.3b NDFI Resources for National Projects

EghtesadOnline: Lawmakers allowed the government on Sunday to withdraw €2.37 billion from the National Development Fund of Iran to be paid in foreign currency for completing national projects in the next fiscal that starts on March 21.

News ID: ۷۴۶۷۷۶

25 February 2019

According to the parliamentary news website ICANA, the motion was approved as an amendment to next year’s budget bill, for which the consent of the Leader Ayatollah Seyyed Ali Khamenei has been obtained.

According to Financial Tribune, details about projects eligible for the sovereign wealth fund and the respective amounts were outlined by ICANA are as follows:

1) boosting defense power as per the Sixth Five-Year Economic Development Plan,  €1.5 billion

2) implementing pressurized irrigation projects, €150 million

3) watershed management and water control projects,  €150 million

4) funding rural water supply projects, €150 million

5) improving production  of the Islamic Republic of Iranian Broadcasting (state broadcaster), quantitatively and qualitatively, €150 million

6) coping with particulate matter (air pollution) and their detrimental effects on electricity networks, €100 million

7) equipping university workshops and laboratories, €40 million

8) supporting the innovative projects initiated by the Vice Presidency for Science and Technology, €70 million

9) supporting innovative projects of the Academic Center for Education, Culture and Research, €15 million

10) implementing sustainability projects and improving quality of drinking water in water-stressed areas, €50 million.

Income Ceiling

Lawmakers set the minimum general revenues in the budget bill at 5,200 trillion rials ($38.5 billion). The figure includes 4,485 trillion rials general revenues and 714 trillion rials exclusive earnings of ministries and state-run companies.

The Oil Ministry has been obliged to give up to 15 trillion rials ($111 million) to supply rural and urban areas with natural gas and complete unfinished gas supply projects mainly in the southern and southeastern regions.

The legislature allowed the Economy Ministry to sell the government’s movable and immovable surplus assets up to 9.5 trillion rials ($70 million) in the next fiscal year. After approval by the Cabinet, the assets are to be sold in public auctions without obligation on the Ministry to observe due formalities.

Moreover, lawmakers approved a government proposal to extend the maturity of loans paid to the Oil Ministry-affiliated companies by March 2022.

As per provisions of the budget bill, the government is allowed to extend the maturity of the principal amount and the interest of Central Bank of Iran and commercial banks’ loans paid to state companies affiliated to the Oil Ministry to fund upstream oil and gas projects by March 2022.

In an amendment to Note 16 of the bill, MPs voted on the proposal to waive the interest on loans valued below 1 billion rials ($7,400). The measure is conditioned on debtors repaying the principal amount of the loans.

In another amendment, the MPs made it mandatory for Bank Maskan -- the state-run housing bank -- to deposit 10% of its earnings from transactions within the electronic banking system with the treasury.  The earnings should be allocated to the State Welfare Organization for building homes for households with minimum two disabled members.

The government is also obliged to deposit 1% of state companies and banks’ expenses with the treasury for education. The budget bill states “The government is obliged to withdraw equal to 1% of the expenses of state companies, banks, and profitable institutions affiliated to the government on a monthly basis and deposit it with the treasury for education.”  The amount excludes expenses of entities up to 75 trillion rials ($555 million).

In addition, the parliament approved part of the budget bill which outlined bartering and settling government-backed debts of legal and real entities to the banking system. In order to swap or settle a portion of government-guaranteed debts of legal and real entities to Bank Saderat Iran, Tejarat Bank, and Bank Mellat via divesting non-cash assets of government, the banks are obliged to redeem the mortgage of debtors and remove them from the list of delinquent customers if they settle their debt in the entirety.