Editor’s Note: Mohammad Salami, a Pakistani academic, focuses on Iran’s economic problems as well as societal trends. He has written for Stimson in the past on Iran’s energy woes, its efforts to control Internet access and the role of sanctions in limiting its ability to function as a hub for trade.
By Barbara Slavin, Distinguished Fellow, Middle East Perspectives Project
Most oil-exporting countries have established foreign exchange reserve funds to diversify their economies and plan for a future not based on fossil fuels.
Iran’s Foreign Currency Reserve Account (known originally as the Oil Stabilization Fund) was established in 2000 with an initial balance of $1.2 billion and renamed the National Development Fund (NDF) in 2011.
“In early 1999, we had many sleepless nights, and our worries were at their peak during the days because we only had three days of wheat reserves in the country,” then President Mohammad Khatami said in parliament in 2001, explaining why it was necessary to create a foreign exchange reserve fund.
The main purpose of the NDF was supposed to be to save and accumulate national wealth for future generations and to invest in productive ventures. Its revenue was expected to increase by two percent a year. The statute that created the fund explicitly prohibits withdrawals to repay government debts. But in part due to economic and banking sanctions that have prevented Iran from accessing oil revenues frozen in foreign banks, the Fund’s reserves have lost their primary function and instead become a piggy bank for paying government debts and covering budget deficits. Iran’s accessible foreign exchange reserves have decreased by 80 percent since Donald Trump unilaterally withdrew from a nuclear deal in 2018 and reimposed crushing sanctions.
The NDF statute also prioritizes lending to the private and public non-governmental sectors, but the public sector has wound up as its biggest beneficiary. Alireza Saleh, Deputy Director of the NDF, said in a recent interview that more than 50 percent of the money accumulated by the fund–roughly $96.5 billion–had gone to the public and state sector from the time the fund was established until the end of 2024.
Complete information about NDF expenditures is not available, but it appears that the largest withdrawals took place during the two terms of President Mahmoud Ahmadinejad (2005-2013), when Iran first began facing severe sanctions pressure over its nuclear program.
In 2008, Ahmadinejad declared the NDF’s balance a secret and, by dissolving the Management and Planning Organization—the organization responsible for designing Iran’s planning and budgeting system—minimized official oversight of withdrawals from the account. Ahmadinejad also made it easier for his government to withdraw money from the fund by dissolving the NDF’s board of trustees and delegating its authority to an economic commission under his administration.
“The Ahmadinejad government has used $161 billion of the $176 billion foreign exchange reserve account,” Ahmad Tavakoli, then a member of Parliament and an opponent of Ahmadinejad, revealed in 2013, a month after Ahmadinejad left office. “This means withdrawing 90 percent of the NDF’s resources in just eight years.”
It is unclear how much money is left in the fund. Saleh announced that $172 billion had been deposited in the NDF since its inception, while the Parliamentary Research Center put the figure at $160 billion. However, most of the money appears to be gone.
“Of the $150 billion in NDF resources, $100 billion has been spent, $40 billion has been lent, and only $10 billion remains,” Mehdi Ghazanfari, Chairman of the Executive Board of the NDF, said at a conference two years ago.
The Parliamentary Research Center reported in July 2023 that the Hassan Rouhani government borrowed 77 times the authorized amount during its two terms in office (2013-2021).
The situation has not improved. According to Saleh, the fund’s balance has not exceeded $21 billion, with available resources of only $11 billion.
The NDF has lent $23.2 billion to “the private sector and non-governmental organizations,” Saleh said, but has struggled to get repaid. Some borrowers have asked to repay their foreign currency loans in rials. Given that Iran’s national currency depreciated more than 1,500 times against the dollar from 2018 to 2025, this would amount to a huge loss for the fund.
According to Article 52 of the financial regulation law, the NDF is required to convert 20 percent of its foreign exchange reserves into rials every year and allocate them to industry and agriculture. In the past, according to this law, about $10 billion of the fund’s resources were converted into rials — currently worth less than $1 billion due to devaluation.
Many borrowers default on their loans. The Parliamentary Research Center reported that 69 percent of loans have become delinquent.
In 2022, Mir Mohammad Sadeghi, a member of the NDF Executive Board, said that the NDF had financed 362 projects over 10 years, of which 233 had been put into operation, but less than 1.5 percent of loans had been repaid.
The NDF is a dwindling reserve for Iran, diverted from its original purpose of storing and increasing the country’s oil revenues for posterity, yet needed more than ever to rebuild after a destructive war with Israel. That Iran’s fund has at most $10 billion now is in stark contrast to its neighbors – Saudi Arabia with over $900 billion and the United Arab Emirates with more than $1 trillion. It is yet another way in which Iran’s ideologically driven regime has failed to deliver prosperity and progress to a large and well-educated population.
Dr. Mohammad Salami is a research associate at the International Institute for Global Strategic Analysis (IIGSA). His areas of expertise include politics and governance, security, and counterterrorism in the Middle East and especially the Persian Gulf region. @moh_salami
Editor’s Note: Mohammad Salami, a Pakistani academic, focuses on Iran’s economic problems as well as societal trends. He has written for Stimson in the past on Iran’s energy woes, its efforts to control Internet access and the role of sanctions in limiting its ability to function as a hub for trade.
By Barbara Slavin, Distinguished Fellow, Middle East Perspectives Project
Most oil-exporting countries have established foreign exchange reserve funds to diversify their economies and plan for a future not based on fossil fuels.
Iran’s Foreign Currency Reserve Account (known originally as the Oil Stabilization Fund) was established in 2000 with an initial balance of $1.2 billion and renamed the National Development Fund (NDF) in 2011.
“In early 1999, we had many sleepless nights, and our worries were at their peak during the days because we only had three days of wheat reserves in the country,” then President Mohammad Khatami said in parliament in 2001, explaining why it was necessary to create a foreign exchange reserve fund.
The main purpose of the NDF was supposed to be to save and accumulate national wealth for future generations and to invest in productive ventures. Its revenue was expected to increase by two percent a year. The statute that created the fund explicitly prohibits withdrawals to repay government debts. But in part due to economic and banking sanctions that have prevented Iran from accessing oil revenues frozen in foreign banks, the Fund’s reserves have lost their primary function and instead become a piggy bank for paying government debts and covering budget deficits. Iran’s accessible foreign exchange reserves have decreased by 80 percent since Donald Trump unilaterally withdrew from a nuclear deal in 2018 and reimposed crushing sanctions.
The NDF statute also prioritizes lending to the private and public non-governmental sectors, but the public sector has wound up as its biggest beneficiary. Alireza Saleh, Deputy Director of the NDF, said in a recent interview that more than 50 percent of the money accumulated by the fund–roughly $96.5 billion–had gone to the public and state sector from the time the fund was established until the end of 2024.
Complete information about NDF expenditures is not available, but it appears that the largest withdrawals took place during the two terms of President Mahmoud Ahmadinejad (2005-2013), when Iran first began facing severe sanctions pressure over its nuclear program.
In 2008, Ahmadinejad declared the NDF’s balance a secret and, by dissolving the Management and Planning Organization—the organization responsible for designing Iran’s planning and budgeting system—minimized official oversight of withdrawals from the account. Ahmadinejad also made it easier for his government to withdraw money from the fund by dissolving the NDF’s board of trustees and delegating its authority to an economic commission under his administration.
“The Ahmadinejad government has used $161 billion of the $176 billion foreign exchange reserve account,” Ahmad Tavakoli, then a member of Parliament and an opponent of Ahmadinejad, revealed in 2013, a month after Ahmadinejad left office. “This means withdrawing 90 percent of the NDF’s resources in just eight years.”
It is unclear how much money is left in the fund. Saleh announced that $172 billion had been deposited in the NDF since its inception, while the Parliamentary Research Center put the figure at $160 billion. However, most of the money appears to be gone.
“Of the $150 billion in NDF resources, $100 billion has been spent, $40 billion has been lent, and only $10 billion remains,” Mehdi Ghazanfari, Chairman of the Executive Board of the NDF, said at a conference two years ago.
The Parliamentary Research Center reported in July 2023 that the Hassan Rouhani government borrowed 77 times the authorized amount during its two terms in office (2013-2021).
The situation has not improved. According to Saleh, the fund’s balance has not exceeded $21 billion, with available resources of only $11 billion.
The NDF has lent $23.2 billion to “the private sector and non-governmental organizations,” Saleh said, but has struggled to get repaid. Some borrowers have asked to repay their foreign currency loans in rials. Given that Iran’s national currency depreciated more than 1,500 times against the dollar from 2018 to 2025, this would amount to a huge loss for the fund.
According to Article 52 of the financial regulation law, the NDF is required to convert 20 percent of its foreign exchange reserves into rials every year and allocate them to industry and agriculture. In the past, according to this law, about $10 billion of the fund’s resources were converted into rials — currently worth less than $1 billion due to devaluation.
Many borrowers default on their loans. The Parliamentary Research Center reported that 69 percent of loans have become delinquent.
In 2022, Mir Mohammad Sadeghi, a member of the NDF Executive Board, said that the NDF had financed 362 projects over 10 years, of which 233 had been put into operation, but less than 1.5 percent of loans had been repaid.
The NDF is a dwindling reserve for Iran, diverted from its original purpose of storing and increasing the country’s oil revenues for posterity, yet needed more than ever to rebuild after a destructive war with Israel. That Iran’s fund has at most $10 billion now is in stark contrast to its neighbors – Saudi Arabia with over $900 billion and the United Arab Emirates with more than $1 trillion. It is yet another way in which Iran’s ideologically driven regime has failed to deliver prosperity and progress to a large and well-educated population.
Dr. Mohammad Salami is a research associate at the International Institute for Global Strategic Analysis (IIGSA). His areas of expertise include politics and governance, security, and counterterrorism in the Middle East and especially the Persian Gulf region. @moh_salami
