Going broke!

BPSA boss predicts cash flow problems for NIS

A private sector executive is predicting that it will not be too long before the National Insurance Scheme (NIS) begins to suffer from the very cash flow problems that the Freundel Stuart administration is experiencing.

Therefore, President of the Barbados Private Sector Association (BPSA) Charles Herbert is not bullish about the NIS’ long-term financial stability unless there a some drastic changes to its mode of operation.

Herbert this morning told a public forum organized by the Institute of Chartered Accountants of Barbados that the social security programme would definitely have a cash flow problem in the foreseeable future.

As a result, he said, Barbadians should expect either fewer benefits or they would be asked to make even higher contributions.

“We do have real problems. But the truth is, all it is going to mean is – and we already have the highest NIS contributions in the region – they are going to have to go higher or we are going to have to cut benefits because we cannot realize our investments . . . . So I think cash flow is going to be an increasing problem for National Insurance like it is a serious problem for Government,” Herbert told those gathered at the Savannah Hotel for the forum themed Homegrown or IMF Designed: What Should Barbados Economic Plan Look Like?

The business executive explained that having gone through the phase when contributions were higher than the paid benefits, and a second phase where they were both about equal, the social security programme must realign some of its investments.

However, he said the scheme was facing a major problem since Government had become addicted to “just borrowing all of the money that should have been invested.

“When we reached the phase where we are no longer generating all of this money to be borrowed, is partly when our problems in having to go now to the Central Bank came because we were already addicted to this steady supply of cash,” Herbert said.

The BPSA head estimated that about a quarter of the contributions due never make it to the scheme.

“Therefore, he said, “what the NIS is having to do is actually not renew its investments with Government, creating a refinancing problem in Government simply because they need cash flow”.

Consequently, Herbert said, in some cases health benefits claims were taking up to a year to be settled.

Minister of Finance Chris Sinckler announced in his Financial Statement and Budgetary Proposals at the end of May and again last month, that with Government owing the NIS in excess of $250 million in arrears through its statutory corporations, there was a plan to issue additional Government papers at a lower interest rate to clear the debt.

The NIS currently holds approximately $1.9 billion in Government papers, representing in excess of 75 per cent of the fund’s assets, and up to the first quarter of this year it had about $222 million in investment overseas.

At the time of the Budget presentation, Sinckler had pointed out that in this financial year savings from the proposed debt re-profiling would be in the region of $70 million on interest expense.

“It is also expected that part of the proceeds from the savings accrued will in turn go to assist with the liquidation of outstanding arrears owed to the NIS,” he said then.

However, Herbert said by lowering the interest the NIS would need more income, which could lead to higher contributions.

“So really all we did when we did that is say ‘you know what, you are going to have to pay more contributions to National Insurance some time in the future to take in the shortfall or adjustments that I just put on investment terms,’” Herbert said.

Chief Economist at Bitt Inc Marla Dukharan described the situation as “a very, very serious” one, pointing out that the NIS already had a liquidity problem that would only be exacerbated by Government’s fiscal programme.

Pointing to the International Monetary Fund Article IV Consultation, which highlighted the need for Government to pay the NIS contributions in a timely manner, and give consideration to a possible reduction in benefits if the situation not quickly corrected, Dukharan said the NIS’ financial position was of grave concern and she believed it could require recapitalization in the future if certain steps were not taken now.

Pointing out that the NIS’ expenditure had exceeded contribution since 2013 instead of the expected 2024 date, Dukharan said the irregular payment of contributions to the fund and the proposed swap of debentures for debt had put the fund “in a much worse position” than anticipated.

And she predicted that when an adjustment programme is implemented to correct the fiscal deficit, low growth, falling reserves and high debt, Government would be “heavily reliant on the NIS”, which she said was “in a very weak [financial] position”.

36 Responses to Going broke!

  1. Saga Boy August 25, 2017 at 1:52 am

    Countries all over the world will experience this lack of future NIS Funds. I am sure Mr.Herbert has clients in the private sector whose pension plans have gone bust. Barbados is not alone in this. I am sure we will find a way to fix this and survive in the long run. There was a time when people did not get a pension and they survived. We always find a way. In the interim if he and his associates would stop the price gouging people would have more disposable income to save for rainy days. A bundle of parasites.

    Reply
    • Rechelle August 25, 2017 at 7:03 am

      Pathetic Saga Boy…..

      Reply
  2. jrsmith August 25, 2017 at 3:47 am

    Everything need fixing in barbados , because we cant find the right people……………………………

    Reply
  3. Tony Webster August 25, 2017 at 6:43 am

    Hmm…N.I.S., when eventually hitting our own, self-built “fiscal wall”…cud have one last desperate throw of the dice…by offering some of their mountain of government paper “investments”…at 50 cents in the dollar. Remember, it’s a MARKET jungle out there…and evahthing is for sale….it’s just the PRICE to be settled-on. Everything…and EVERYONE…has a “right” price…n’est pas?

    Lord, why don’t we read history (and economic) books?

    Reply
  4. Carson C Cadogan August 25, 2017 at 7:06 am

    What Charles Herbert needs to do is to encourage the Barbados private sector of which he is head to pay central Govt. the more than $650million it owes in taxes, duties, rents. That would go a long way to correcting the fiscal problems we now face. He has been strangely silent on this for a long time.

    What Charles Herbert needs to do as is to encourage The private sector to bring into Barbados the Foreign exchange which it has stash in overseas accounts contrary to Law.

    What Charles Herbert needs to do is to direct the private sector of which he is head to spend some of the more than $6billion which it has sitting in Bank vaults catching rust. This would give a fillip to the local economy of Barbados. A country he pretends to love.

    Reply
    • Sunshine Sunny Shine August 25, 2017 at 11:06 am

      What the government of Barbados needs to do is stop going to bed with the private sector and exchanging sweet kisses that reciprocate. If the piper pays, he is the one who gets to sing what ever he likes. You could really tell the truth why they owe 650 million ya Clown.

      Reply
  5. Greengiant August 25, 2017 at 7:30 am

    Herbert and Co has failed to get their desired results from the march, so he’s now using the other alternatives available to him. The fact that the very private sector he represents owes government an insurmountable amount of tax revenue, with some members owing the very N I S scheme, I would advise him to see that his members pay up or simply shut up. Why don’t his association pass a law within the organisation that those who owe an unacceptable amount of revenue to government be disqualified from membership? It’s time government get tough on all business defaulters.

    Reply
  6. John C King August 25, 2017 at 7:48 am

    Tell Charles Herbert to stop telling us what his friends are planning and doing. Tell him we gine lock up his friends who can pay NIS and would not pay it, would not pay the VAT , would not pay PAYE . Unemployment has not grown and still people spending and workers getting pay. All t5hem should be lock up

    Reply
  7. Chris Barnett
    Chris Barnett August 25, 2017 at 8:03 am

    = DRIP drop the machine is leaking OIL hmmmmmm anyone good at algebra could see this COMING FROM A MILLION MILES AWAY lol …………………..SAD that most just don’t think of these things because it doesn’t affect their everyday life until it does……………..the fundamental human problem……………then everyone scrambling when it does……………..HOW DID IT GET THIS WAY ???? WHY DID NO ONE COME OUT AND SAY ANYTHING????? IS THERE A PLAN TO CORRECT THIS IN THE EARLY ???? ……………………………PEOPLE SIT DOWN AND BLAST THE BLP……………..but when in the history of Barbados have we had to look over our backs at atms or while partying or dodging a pot hole and get in an accident………………………….ETC…….ETC………ETC………..(…………..AND YET WE HEAR STUFF LIKE “MEH WE NOT THE WORST IN THE CARIBBEAN”………. WHO EVEN THINKS LIKE THAT????………….) (THAT MEDIOCRE MENTALITY OF COMPARING OURSELVES TO OTHERS STARTS IN SCHOOL MANY PEOPLE BUILD THAT IDEOLOGY OF YES THE REST OF THE CLASS FAILED ALONG WITH ME SO ITS OK) (THESE ARE THE UNDERACHIEVERS IN LIFE AND IF THE LEADERS OF THIS COUNTRY CHOOSE THIS PATH THEN WE WILL NEVER BE STRIVING FOR 1ST IT WILL ALWAYS BE 20TH IN CLASS OUT OF 22 AND WE ARE HAPPY OK COOL DO YOUR THING IF THAT MAKES YOU ALL SLEEP WELL AT NIGHT ! ) ……………………………………… these are all variables connected no one is just not seeing the LARGER PICTURE BARBADOS NEEDS SOME SERIOUS REPAIRS BOTH PHYSICAL AND METAPHYSICAL SO THOSE WHO ARE IN POWER PLEASE GET TO WORK….BYE!

    Reply
  8. Lee August 25, 2017 at 8:17 am

    The time has come,’ the Walrus said,
    To talk of many things:
    Of shoes — and ships — and sealing-wax —
    Of cabbages — and kings —
    And why the sea is boiling hot —
    And whether pigs have wings.’

    But wait a bit,’ the Oysters cried,
    Before we have our chat;
    For some of us are out of breath,
    And all of us are fat!’
    No hurry!’ said the Carpenter.
    They thanked him much for that.

    Reply
  9. Caroline Clarke
    Caroline Clarke August 25, 2017 at 9:02 am

    Remember not to long ago a minister say um good and a few days later another minister say um got a hiccups but now we seeing the real truth um almost break.but what happened or is happening to the employee money which the employeers take out of your salary .who thinks it their money that they can spend it as they like with no accountability. What will happen when the kitty runs dry .

    Reply
  10. Gillian Skeete
    Gillian Skeete August 25, 2017 at 9:29 am

    Govt needs to send people home retail needs to lower prices how can people keep paying more???????

    Reply
  11. Carson C Cadogan August 25, 2017 at 9:41 am

    Charles Herbert need to stop coming with all this FAKE NEWS trying to undermine our Black Govt.

    Reply
    • hcalndre August 26, 2017 at 6:07 am

      @Carson C Cadogan; this Black Government is looking out for themselves, it boggles my mind how they can become rich in such a short time and are very concern about other people progress. When they leave or push out they will live happily after, knowing that they have made it off the backs of their own people.

      Reply
  12. milli watt August 25, 2017 at 10:23 am

    hmmmmmm :-/……a Greece in the Caribbean. I got to try and get my money out of the NIS asap!

    Reply
    • Carson C Cadogan August 25, 2017 at 10:35 am

      RUBBISH.

      You ought to tell CHARLES HERBERT to get the private sector to pay the NIS the millions they owe it and stop talking foolishness.

      I know of plenty workers who when sick made claims to the NIS only to be told that they were no contributions made for them.

      the workers then produced payslips showing that the companies with out fail were taking out NIS contributions. but were not paying them into the NIS. Why wont he talk about that.

      All he is trying to do is to pull down our Black Govt.

      Reply
      • hcalndre August 26, 2017 at 6:17 am

        @Carson C Cadogan; who is to be blame here? The workers or the system, workers only know that they don`t have any funds when they`re sick or it`s time to retire?

        Reply
  13. Roc Kinn
    Roc Kinn August 25, 2017 at 11:15 am

    Herbert man catch some of the CARIFESTA dancing and chill take MacDowell with you. Barbados will be fine our people have always faced down adversity this time will be no different. Stuart and his cabinet heard you and the unions they are not fools. Stuart and the cabinet more astute and more committed to our beautiful homeland than you and MacDowell will ever be.

    Reply
  14. Kathy August 25, 2017 at 11:25 am

    That Charles Herbert is coming from any angle necessary to push his one-sided agenda and because he was able to form an unholy alliance with the unions to march up and down Barbados he believes that he can continue to railroad right-thinking Barbadians. What he needs to do is stop trying to distract people with his rhetoric and come with a genuine solution to the problem.

    Reply
  15. harry turnover August 25, 2017 at 2:18 pm

    @CCC….”I know of plenty workers who when sick made claims to the NIS only to be told that they were no contributions made for them.”
    Then your Government has THE right to lock them up fa teefing the workers money.
    Legislation should have been passed ever since to stop that igrance as it also happens under the BEES.
    Employers who TAX people ( those who charge VAT and keep the money ) should be LOCKED up too.

    Reply
    • hcalndre August 26, 2017 at 8:38 am

      harry turnover; don`t tell me the there is no law to protect the workers from this sort of fraud. That`s why I say that the system is the problem. Wont prosecute because of the coterie.

      Reply
  16. Lee August 25, 2017 at 2:57 pm

    The time has come,’ the Walrus said,
    To talk of many things:
    Of shoes — and ships — and sealing-wax —
    Of cabbages — and kings —
    And why the sea is boiling hot —
    And whether pigs have wings.’

    But wait a bit,’ the Oysters cried,
    Before we have our chat;
    For some of us are out of breath,
    And all of us are fat!’
    No hurry!’ said the Carpenter.
    They thanked him much for that.

    Reply
  17. lswiltshire August 25, 2017 at 4:02 pm

    Is it true that Herbert was mart enough to be a Bdos scholar and to be an actuary?

    If this is so, is it reasonable that he was talking sense in the forum that he addressed?

    He was not talking to folk in Spooner’s Hill. Nor was he talking to Eustine’s landlord with whom she horned the taxi driver.

    Why are we hearing this bovine exudate about a white man vs a black government?
    Either the government has failed to implement proper policies or it has not.

    Either the government needs to learn proper acturarial or monetary policies or it does not.

    Clearly something has not been going right for 10 years now
    Clearly the government has failed to implement proper policies for 10 years now.

    Reply
  18. Carson C Cadogan August 25, 2017 at 5:21 pm

    “Clearly the government has failed to implement proper policies for 10 years now.”

    That’s a matter of opinion.

    Reply
  19. Tony Webster August 25, 2017 at 6:09 pm

    @Carson: Sir, I nominate you for a Senatorship in the next DLP administration. (at some distant, indeterminate time) when you will be able to do much better than Hooked, Cooked, Lien, and Sinking…at M.O.F. and “make Barbados Great Again!!
    BTW, if government owes Private Sector Nuff hundred million and Gov’t will not, or cannot, pay up….you really expect P.S. to cough up the nuff million owed TO them? You think the banks that extend loans and overdrafts to sustain the Private Sector, are dummies and would raise these capriciously, when common sense simply screams for a simultaneous, off-setting
    or exchange of cheques mechanism? As for putting the $6 Billion languishing in commercial banks to better use, this is the public’s money, and each account holder will use it as they see fit…that is, as long as we respect private property, as our constitution allows. Hmm…you or your good friend cud start a “Simmons Bank”…and Trump evahbody!!

    Reply
  20. lswiltshire August 25, 2017 at 7:21 pm

    s it true that Herbert was mart enough to be a Bdos scholar and to be an actuary?

    If this is so, is it reasonable that he was talking sense in the forum that he addressed?
    iS THIS A MATTER OF OPINION TOO

    Reply
  21. Seaweed August 25, 2017 at 7:47 pm

    Is it true that Thompson once said about the N.I.S. That it was “time to slay the fatted calf”? The government raided the N.I.S. Pure and simple.

    Reply
  22. hcalndre August 26, 2017 at 8:50 am

    This Government is in dire need for cash so by any means necessary they will go after it as long its not from the 10%. If Jessie James ride into town with a loot they will take that too.

    Reply
  23. Donild Trimp August 28, 2017 at 1:12 pm

    @ Lilian Lloyd –

    Why is it that you only reply to articles with your picture?

    Are we suppose to look at your picture and come up with what you are thinking?

    Stuuuuupppppes !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    Reply
  24. The Flier August 28, 2017 at 10:03 pm

    Did Charles Herbert and the Private Sector run the Country down to the Mess it is in ??? I thought it was the Government that don’t have a clue of what the Hell they are doing ?? Who is taking out the MILLIONS of dollars out of the NIS to prop up their weekness, spend the money on Buildings like Olice Station pay out Barack etc,etc,etc,etc. Why don’t we ask those who put us in this mess to take us out of the mess they created ???? Whimpps.

    Reply
  25. Andrew Simpson September 9, 2017 at 5:41 pm

    If we can reduce public sector expenditures (cancel upcoming geographical constituency parliamentary elections) and improve economic viability of the Barbados brand, with a few qualified sectoral leaders elected on a digital direct participatory democracy platform, then debt might be converted to equity by local and foreign investors and confidence restored.
    Free and fair market enterprise, encouraged under a new governance model, with Kingdom values, can bring social harmony and financial prosperity.

    Reply

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