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Road Map of National Development Fund of Iran (NDFI) for the New Year (2013-2014)

Road Map of National Development Fund of Iran (NDFI) for the New Year (2013-2014)

Dr. Mohammad Reza Farzin, president of NDFI explained the current situation of the economy, the political status and the developments ahead of the country. Referring to the importance of NDFI in the economic position of the country and its pivotal role in cutting reliance on oil revenues, he highlighted the need to view NDFI from a long-term, strategic perspective, capable of financing develo...

Dr. Mohammad Reza Farzin, president of NDFI explained the current situation of the economy, the political status and the developments ahead of the country. Referring to the importance of NDFI in the economic position of the country and its pivotal role in cutting reliance on oil revenues, he highlighted the need to view NDFI from a long-term, strategic perspective, capable of financing developmental projects and contributing to the economic stability. He drew a picture of the NDFI roadmap for the new Iranian year (1392)[1], emphasizing on investments abroad he said that NDFI has started the new Iranian year with a clear and documented plan, consisting of 9 pillars:

1- Balanced allocation of resources among all sectors and provinces through the agent banks,

2- Increasing the number of agent banks and amending the agency contracts with the banks based on their risk ratings and performance,

3- Organizing a mechanized online comprehensive data bank for The inflow and outflow of NDFI resources to expedite allocation as well as monitoring all the functions for allocation of resources,

4- Improving transparency rating and assets ranking of NDFI in the international arena,

5- Diversifying the assets in various foreign markets for risk distribution,

6- Enhancing cooperation with international investors and economic practitioners,

7- Promoting cooperation with international monetary and financial institutions, including the World Bank, IMF and Islamic Development Bank,

8- Getting into the foreign assets' markets in particular Sukuk market in the Middle East and Asian markets,

9- Execution and finalizing the supervision and credit rating model.

Dr. Farzin reported on the performance of NDFI during last year, saying: NDFI established itself through its performance in line with its plans, in a way that its developmental role in the economy was established. The resources of NDFI hit 48.5 billion dollars, making it the largest financial institution in the country. The transparency rating of NDFI has improved sharply during last year and plans have been made to improve it further.

According to the approved plan, NDFI assets will be diversified through purchase of low-risk fixed-income assets. The companies issuing the assets, and the assets themselves should have AAA ratings.

The target for making investments in foreign assets is 10% of NDFI resources which will increase gradually. The benefits of this approach are:

- Optimizing the risk through making diverse investments in diverse markets and the foreign markets anchor the risk of domestic markets,

- Disbursements in the domestic markets, currently done through the agent banks, shall be made to the extent that the banks may take risks,

- Allocation of resources in the domestic markets are made to the extent that do not cause overheating or macro-economic risks and defaults of the banks,

- In the medium term, the allocations shall move towards moderate risk and acceptable return. The floor for the returns should be higher than the average world inflation to maintain the purchasing power of the resources in mid-term and long-term periods,

Given the situation of domestic production sector, he pointed out the necessity of providing finance for this sector in national currency in line with the annual budget, although the main task of NDFI is to finance in hard currencies.

Some specific proposals have been submitted to the parliament to authorize NDFI for making investments in the domestic financial markets. The fact that NDFI is merely authorized to carry out activities through the banking system increases the risks of NDFI.

Preparing the ground for NDFI to enter domestic financial markets, may reduce the risks and facilitate financing of the projects. Making investments in backward regions of the country, through the developmental organizations is among the other plans of NDFI for the current year which need the approval of the parliament.



[1] . Persian year of 1392 starts on 21st March 2013

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  • Road Map of National Development Fund of Iran (NDFI) for the New Year (2013-2014)

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