With Khamenei's Approval, the National Development Fund's Share of Oil and Gas Revenue Halved This Year

The Supreme Leader of the Islamic Republic approved the Iranian President's proposal to temporarily reduce the National Development Fund's share of the country's oil and gas sales revenue. According to the official news agency of the Islamic Republic, IRNA, on Sunday, September 2, Masoud Pezeshkian had called for a 20% reduction in the fund's share this year. Based on a parliamentary resolution in the first section of the 2024 budget bill, the National Development Fund's share of oil and gas revenue was set at 40%; this share has now been halved with Ali Khamenei's approval. Consequently, 350 trillion tomans will be transferred as a 'loan' from the National Development Fund to the government's development budget. This amount is intended to pay the claims of wheat producers, purchase some essential items, and address some issues faced by truck drivers. On Saturday, September 2, Pezeshkian noted that wheat worth over 200 trillion tomans had been delivered to silos by producers, stating that 120 trillion tomans had been budgeted for their payments; however, this amount is also not available in the government's fund. Pezeshkian: 'We need 100 billion dollars in foreign investment and communication with the world.' The Iranian President stated on Saturday evening, September 2, in an interview broadcasted on Islamic Republic television that to achieve an 8% growth rate, 200 billion dollars in investment is needed. However, he added, 'The total money we have in the country is more than 100 billion dollars, so we need 100 billion dollars in foreign investment, which relates to our communications with the outside world, with neighbors, and with Iranians abroad.' The recent decision to withdraw another 350 trillion tomans from the National Development Fund comes amid previous concerns and warnings regarding government withdrawals from this fund. About nine months ago, Mehdi Ghazanfari, the head of the National Development Fund, emphasized that over the past 12 years, various governments have borrowed more than 100 billion dollars from the fund's balance, stating that there is little hope for the return of these resources. Ghazanfari also highlighted that despite the allocation of 20 to 40 percent of oil and gas revenues to the National Development Fund, the actual share of this fund has been less than 10 percent, warning about the possibility of governments denying their debts to the fund, a situation that occurred less than two weeks later: on January 6, 2023, Ehsan Khandoozi, the Minister of Economy and the government's economic spokesperson, announced that the government's 100 billion dollar debt to the National Development Fund was not accepted by the government. 'Withdrawal of 6 billion dollars from the Central Bank of Iran's resources to cover the budget deficit.' This comes as the Research Center of the Parliament had previously predicted that the government of Ebrahim Raisi would withdraw another 365 trillion tomans from the National Development Fund by the end of 2023. Three weeks ago, Gholamreza Tajgardoon, the head of the Parliament's Planning, Budget, and Calculations Commission, reported a 'very high imbalance' in the 2024 budget. According to this parliament representative, in 2024, the government's main foreign currency expenditures exceeded 18 billion dollars, of which 12 billion dollars were covered by the government budget, and nearly 6 billion dollars of the deficit was withdrawn from the Central Bank's foreign currency resources and the National Development Fund.