Challenges Facing Management of National Development Fund (NDF) in Iran's 5th Five-Year Economic Development Plan (2011-2015)

One of the most important goals of Iran's 5th Economic Development Plan is to change the existing approach to oil and gas resources and revenues. The main aspect of this appraoch is the “National Development Fund” (NDF) which has been mentioned in Iran’s 20-Year Perspective Plan as defined by the Expediency Council. The current paper, studies challenges facing the Fund in three major areas: independence from the government, transparency and investment goals. The results show that the NDF can be only successful under specific conditions; otherwise it will cause a lot of problems for the financial sector of the Iranian economy. Therefore, certain decisions should be made by policymakers to reach that situation. Firstly, the man goals of the NDF and its regulations must be clearly specified. Secondly, government’s access to the Fund should be limited by making withdrawal from the NDF conditional on the parliament’s permission. Thirdly, data on the inflow and outflow of the NDF should be made public for better supervision over the Fund’s performance. Moreover, we suggest that part of the NDF’s resources should be allocated to compensating the effects of the declining oil production.