Challenges Facing Iran’s Membership in the New Development Bank (NDB)

Iran faces a range of technical, institutional, and international challenges in its path toward cooperation with and benefiting from the services and financing facilities of the New Development Bank (NDB). These constraints may affect the process of project financing and Iran’s active participation within the institution.

Lack of an International Credit Rating

One of the most significant challenges is the absence of an internationally recognized sovereign credit rating for Iran since 2006. This situation creates limitations in the bank’s credit assessment procedures and complicates risk evaluation for proposed Iranian projects.

Mandatory Alignment with International Rules and Institutions

Compliance with FATF Regulations

The New Development Bank is required to fully comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations under the Financial Action Task Force (FATF) framework. Limited alignment with this framework may restrict the implementation of certain projects and access to financing.

Adherence to International Policy Decisions

As seen in the suspension of the bank’s activities in Russia following international sanctions, member states are expected to align with broader international policy environments. Any divergence in this regard may create obstacles to project approval and financial disbursement.

Limited Experience in Accessing International Development Finance

Iran’s relatively limited experience in utilizing the capacities of international development banks may complicate project execution and compliance with NDB operational standards.

Insufficient Alignment with the Bank’s Development Priorities

The New Development Bank places strong emphasis on climate agreements and sustainable development priorities, including commitments related to the Paris Climate Agreement. Limited alignment with some of these priorities could reduce the likelihood of project approval.