Majlis Budget Decisions on Finance, NDFI Withdrawals

EghtesadOnline: The parliament convened early Sunday and passed measures on foreign finance, withdrawals from the National Development Fund of Iran, transfer of funds from the banking network to the treasury, loans to academic institutions and loan penalty waivers.

News ID: ۷۷۴۲۱۰

27 February 2017

These were part of the review of the 2017-18 budget law pertaining to government earnings, ICANA reported.

MPs approved Clause 3 of the law previously amended by Majlis Joint Commission, which allows the government to "receive or guarantee loans, credits or assistance from foreign governments or international financial institutions up to $5 billion".

The administration has been allowed to attract these funds for “infrastructural and developmental plans by prioritizing knowledge-based, scientific and research, agricultural, water and soil, environmental, and cultural and artistic schemes”, according to Financial Tribune.

NDFI Withdrawals

The parliament also approved Clause 4, which authorizes the government to draw from the incoming assets of NDFI in the coming year and transfer them to the treasury.

As approved, the government will be able to draw “$200 million equivalent to  6.6 trillion rials to increase the capital of Innovation and Prosperity Fund, $300 million or  9.9 trillion rials for irrigation”, another $300 million “for rural water supply schemes and their development, $100 million or 3.3 trillion rials for the Islamic Republic of Iran Broadcasting (the state radio and TV body), $1.3 billion equal to 24.9 trillion rials to strengthen defense prowess”, and a further $100 million “to combat dust storms” mainly plaguing the southern province of Khuzestan.

The grand total equals $2.3 billion, “the rial equivalent of which is 75.9 trillion rials”.

Recourse to the assets of the national development fund drew criticism from a number of MPs who argued that the assets belong to future generations and should not be spent, while those in favor noted that the government must be allowed to use the assets to resolve a wide variety of issues, including development of defense and agriculture sectors, which should not be postponed”.

Parliament Speaker Ali Larijani was in favor of tapping into the fund’s reserves, saying the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei has been briefed on the issue and he has approved the measure.

Treasury and Academic Institutions

MPs then approved an appendant provision to the budget law concerned with how earnings from reduced costs will be moved to the treasury.

The provision states that through the treasury, the government is obligated to take 1% of one-12th of the “expenses of banks, profitable government-affiliated institutions and profitable government-owned companies” stated in the law from their accounts and “deposit them to the public earnings account of the treasury”.

The parliament also approved a number of provisions in Clause 9, which permit universities, educational and research institutions and science and technology parks to apply for loans from banks “up to the annual share of their budget”.

As part of the provisions, Welfare Student Funds of the Ministry of Science, Research and Technology, the Ministry of Health and Medical Education, and Islamic Azad University are legally bound to deposit the funds resulting from the repayment of tuition loans of 2006-14 to the public earnings account of the country.

In another provision of the clause, the parliament decreed that funds resulting from the repayment of the aforementioned loans “and also other assets resulting from the activities of the fund” must be considered in their usual budget as long as they do not exceed 11.3 trillion rials ($29.89 million).

Finally, parliamentarians extended the duration of a previously approved loan penalty waiver scheme, decreeing that the penalties pertaining to loans of under 1 billion rials ($26,500) will also be forgiven during the next fiscal year that begins on March 21.