Companies Borrowed $3.2b in 7 Months: NDFI

EghtesadOnline: The National Development Fund of Iran gave 880 trillion rials ($3.2 billion) in loans in the first seven months of current fiscal year (March 20-Oct.21), the managing director of the sovereign wealth fund said.

News ID: ۷۸۷۶۷۰

23 January 2022

In terms of recipients, Mehdi Qazanfari said mines and industries topped the list of rial loans with 56%, the IRIB website reported.

“Almost 27% of the money went to water and agriculture projects, 10% to the processing industries and 10% to help promote tourism,” Qazanfari was also quoted as saying.

NDFI is independent of the government and was set up in 2011 to curb dependency on oil and save a percentage of the earnings from oil and gas exports for the welfare of future generations.

The official said the NDFI also gave loans in foreign currency to private and public sector. He did not provide details.

“Forex loans were given to 360 projects with private sector enterprises accounting for 40% of the total.”

Interest on rial loans is 14-16% while forex loans carry 3.5- 6%, 2.5% of which goes to agent banks.

Pointing to shortfalls of the fund, Qazanfari said the “sovereign fund would do better to invest than lend”.

The NDFI since inception in 2011 has invested $27 billion in oil, gas and petrochemical sectors, $13 billion in water infrastructure, $5 billion in power plants and $1.5 billion in creating rural jobs, he added.

He concurred that banks are facing problems with NPLs and increased lending is a real challenge, in particular in settling forex loans as borrowers prefer to repay their debt in rials.

In one case, he referred to power plants that borrowed $4 billion from the NDFI and are unable or unwilling to reimburse asking to pay in the national currency.

“This will further undermine the fund’s resources. We will never let this happen,” he stressed.

As per law, 80% of NDFI resources should be used to fund private company projects with non-government public entities allowed to use the balance.

After oil exports were hurt due to the 2018 US sanctions,   input into the fund declined while the government increasingly tapped into NDFI to plug its ballooning deficit.

In the 2022-23 budget, the government is supposed to deposit 20% of revenue from oil and gas export into the fund instead of 40% as per rules.

NDFI share from oil export is forecast 1,370 trillion rials ($4.8 billion).