Iran’s Sovereign Wealth Fund Crumbles Amid Deepening Fiscal Mismanagement
Iran’s National Development Fund (NDF) has effectively ceased to function as a sovereign wealth entity, according to a damning new report by the Iranian Parliament’s Research Center.
Once envisioned as a catalyst for sustainable development and private-sector growth, the fund has received no real dollar deposits from oil revenues in the current fiscal year, which began in March 2023. By law, a share of oil, gas, and condensate export income should flow directly into the fund. Instead, the Central Bank has withheld the revenues, recording them only as paper entries.
Billions Vanish from Iran’s Future
Since its inception, the NDF was legally entitled to more than $155 billion, yet a significant portion was either never transferred or was withdrawn by the government without being logged as sovereign debt. Many of these withdrawals lacked legal documentation, undermining the fund’s founding purpose as a savings mechanism for future generations.
Short-Term Fixes Replace Long-Term Strategy
The report accuses the Central Bank of repurposing the fund’s reserves to stabilize Iran’s currency and cover budget gaps—recasting the NDF as a tool for short-term crisis management rather than strategic national investment.
Of the $132 billion spent by the fund through January 2025, $85 billion went to government expenses, while only $37 billion supported private and semi-public entities. Loan recovery is alarmingly poor: just $8 billion of $36.5 billion has been repaid, marking a 68% default rate—compared to a global average of 6% for sovereign wealth funds.
Investment returns are even more dismal, averaging less than 1% annually, far below international norms and signaling a failure in both financial strategy and institutional oversight.
The report concludes the NDF is now non-operational, inefficient, and adrift, failing to meet its legal obligations, protect national assets, or offer a meaningful roadmap for Iran’s economic future.
Regional Snapshot: Iran Trails the Trillion-Dollar Club
In contrast to Iran’s faltering fund, neighboring Persian Gulf states and Azerbaijan command over $3.6 trillion in oil-related sovereign wealth, according to global data. Including other sovereign assets, the region’s total surpasses $6.7 trillion.
The United Arab Emirates alone manages $2.3 trillion across eight sovereign funds. Its oil-linked Abu Dhabi Investment Authority (ADIA) oversees more than $1.1 trillion in assets.
Meanwhile, Iran controls less than 0.5% of the region’s sovereign wealth—despite holding the largest gas reserves and being the third-largest oil producer in the region, after Saudi Arabia and Iraq.
Experts blame decades of mismanagement, entrenched corruption, and paralyzing sanctions for hollowing out Iran’s financial system and derailing any prospect of sustainable wealth accumulation.
