Santiago Principles Self-Assessment

National Development Fund of Iran

Fund Details Fund Website Search Assessments PDF version
  • Pillar 1: Legal
  • Pillar 2: Institutional
  • Pillar 3: Investment
Principle 1

1. The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s).

1.1. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions.

1.2. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed.

-The Article of Association of National Development Fund of Iran (NDFI) has been approved under the 5th development program and its A.O.A. turned to a permanent law at the starting year of the 6th development program and publicly released.

Now the NDFI has an independent and legal identity as nongovernmental public entity.

-The architecture of its governance is based on three main pillars containing Board of Trustees, Board of Executives, & Board of Supervisors, combination of each of them is defined and their responsibilities are clear.

-According to current procedures of Sovereignty, through the Government’s introduction of emergency bill and Parliamentary approval, in some important items like “natural disaster” or “water management infrastructure” financing for Public Investment is possible and it might dominant some authorities of Board of Executives.

-At all, any loan to central government and other state owned enterprises has been banned by A.O.A. but currently facing to “serious budget deficit”, some portions of NDFI resources has been granted to Government, in absence of a defined fiscal rule on central government budget.

Principle 6

6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.

- NDFI reviewing its previous results and taking feedback from the past, has improved its organizational chart and also moved deep inside the Fund’s functional definition and trying to prepare prerequisites and responsibilities for each job.

-So the new arrangement has taken feedback from new economic situation of country and new NDFI’s priorities. New chart is available online on our website.

Principle 18

18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.

18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.

18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.

18.3. A description of the investment policy of the SWF should be publicly disclosed.

-NDFI’s investment bylaw is prepared based on the principles of the A.O.A. and currently all loans from the resources of NDFI that allocates through the agent banks are under guarantees of banks for repayment of principle and interest. So the systematic risk for NDFI might arise from banking system default risk.

-Since the major activities of NDFI are concentrated on local economic sectors, then the risk of NDFI can be equivalent to the macroeconomic risk of the Country. -In this regard one of the significant risks for NDFI is related to foreign exchange rate fluctuations.

-NDFI’s Investment policy is publicized & online available.