Government moving to clear NIS debt

With Government owing the National Insurance Scheme (NIS) in excess of $250 million in arrears through its statutory corporations, Minister of Finance Chris Sinckler has disclosed that he has been in discussion with officials of the scheme with the view of embarking on a bartering system in order to help clear that debt.

“[The debt is] coming down but it is high, and that, of course, jeopardizes the cash flow availability to the National Insurance Scheme. I believe the NIS has about $1.9 billion invested in Government papers,” said Sinckler as he led off debate on the National Insurance and Social Security Bill 2017 in Parliament on Tuesday.

The Minister of Finance said it was not a pleasant feeling for the Government to owe the fund, but said he was “sitting down” with NIS officials to determine the fund’s cash flow projections and needs “to determine how much of the outstanding amounts it will require in cash now, and then determine from the residual amount left, how much of that and where such amounts can be liquidated by giving of additional Government papers”.

“I am determined – and I have said to staff at the Ministry of Finance that is negotiating with the NIS on how to go about this – that we will secure resources to pay a substantial more portion of that in cash because, of course, the NIS invariably invests more so it pays us to pay them….

“One of the things we have to ensure [is] that starting from this financial year, all contributions to the NIS must be paid on time and in full. That is the instruction from my office . . . [to] our statutory corporations,” said Sinckler.

While not entirely dismissing critics that the fund was investing too much in Government paper, Sinckler said one of the challenges for the fund was the limited local investment that could offer “substantial” rates of return, though he said he wanted to see the fund investing in more local instruments.

At the same time, he said Government papers have been giving the NIS “substantial returns”.

“The rates of return, in some instances, on NIS real estate that is leased to Government, can exceed 10 per cent return on investment,” Sinckler pointed out.

Between 63 and 75 per cent of the NIS investment is traditionally invested in Government paper, he said, adding that the NIS currently has $222 million in investment overseas.

“I am not dismissing the people who say the National Insurance Scheme should not invest heavily in Government. I always make the point – I agree with you, I think the best thing for the Government of Barbados is to wean itself off the NIS because the amount of resources that we have to extend paying the NIS for these various things – the loans, the bonds, securities, the real estate – is substantially more than we would pay even if we had to go down in Broad Street and do so. But we do it because we are all invested in the social security scheme; we want it to do well and therefore we do this,” explained Sinckler.

He also pointed that for the NIS to invest more overseas it would mean using up more of the island’s foreign exchange, which was already struggling to stay above the 13 weeks benchmark.

“I think the NIS should invest a little bit more in private sector activities. . . .That is my view personally . . . I feel it should look for strategic areas in the Barbados economy which they can invest in, because to do so helps to expand economic activity, grow your economy, create greater employment and eventually create greater contributions to the fund,” the Finance Minister said.

He said one of the risks of the NIS investing in Government was that “however the Government goes, the investment goes” and therefore when Government experiences cash flow challenges, it is difficult to make its contributions, which has been the case in recent years.

In fact, Sinckler said he agreed that concerns expressed by the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB) about the long-term viability of the scheme, were “legitimate”.

Late last year, the IMF cautioned that if the Fruendel Stuart administration and state-owned enterprises continued to pay the scheme late, it could face a shortfall in years to come.

 

14 Responses to Government moving to clear NIS debt

  1. Gavin Dawson
    Gavin Dawson July 15, 2017 at 12:14 pm

    Will it be before Election time?????

    Reply
  2. Akeem Thompson
    Akeem Thompson July 15, 2017 at 12:16 pm

    Because 3000 more people going home

    Reply
  3. Alwin Ellis
    Alwin Ellis July 15, 2017 at 12:25 pm

    Esther, I hope you see where the people NIS money gone.Always wanting people to believe that being on sick leave draining the fund when it is really DEM that hijacking the hard working people FUNDS

    Reply
    • Nico HL Beckles
      Nico HL Beckles July 15, 2017 at 8:39 pm

      she just has to look in her account balance to see where some gone

      Reply
  4. Aquarius Rastress
    Aquarius Rastress July 15, 2017 at 12:33 pm

    To clear it or to take more stupseer

    Reply
  5. Keera Harding
    Keera Harding July 15, 2017 at 12:50 pm

    Talk so damn cheap. It’s so easy to open ur fat mouth

    Reply
  6. Sandra Lorde-Breedy
    Sandra Lorde-Breedy July 15, 2017 at 1:04 pm

    We moving to vote wunna out

    Reply
  7. Tamiya Wasnice Best
    Tamiya Wasnice Best July 15, 2017 at 1:10 pm

    I want my blasted money……everytime I call it’s some stupid ass excuse bout de printer I work my ass off for that and I want it

    Reply
  8. Paulette Callender
    Paulette Callender July 15, 2017 at 3:50 pm

    So true Alwin Ellis

    Reply
  9. Errol Rayside
    Errol Rayside July 15, 2017 at 4:24 pm

    Parasitic Economics: politicians are all crooks—all politicians are criminals.

    Reply
  10. John Everatt July 15, 2017 at 6:36 pm

    This has been going on for years. The game is to deduct from the workers’ pay then pocket that money even though it is the employees’ money that they are pocketing. Can you imagine what would happen if these had been private corporations? In any other world this would be called thievery. My guess is that this practice will not stop anytime soon. $250 million?

    Reply
  11. Ali Baba
    Ali Baba July 15, 2017 at 8:40 pm

    50MIL IN SICK BENEFITS AS OPPOSE TO TEETHING OVER 250 MIL…BUCKOO YA DEY

    Reply
  12. ks July 16, 2017 at 9:18 am

    All these years we were led to believe that it was the private sector & crooked individuals failing to pay over the worker deductions to NIS ….. but all this time, Govt. was the biggest defaulter!!! No wonder all the ‘hot air’ threats about going after defaulters never amounted to anything…… they would have had to lock themselves up ….lol!

    Reply
  13. Tony Webster July 16, 2017 at 10:06 am

    Hmmm…time to dig deep and come up wid imaginative solutions. How’s about doing a forward-exchange contract wid Les Chinois: unborn flying-fish 20 years out…for some USD, cash on barrel-head, right now. Would be great deal…if we cud agree on the exact rate…

    Esther will be deliriously happy, and me too….since I had pleasure of recently meeting said lady. Madam Minister…are you there? Will be happy to assist. Lunch?

    Reply

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