Delinquent businesses and employers owe $1.3 billion to the National Insurance Scheme (NIS) and the entity hopes to recover the sum this year even as government intends to examine options for repayment of $5.24 billion owed to the Scheme by failed insurance company Clico.
Presenting budget 2016 to the National Assembly yesterday, Minister of Finance Winston Jordan pointed out that the NIS has faced several challenges over the years, including lack of compliance by both employers and employees combined with unprofitable investments.
“In 2016, the government intends to examine options for repayment of $5.24 billion owed by CLICO. To this end, the government will start discussions on the modality of an arrangement that will see NIS recovering this money over the long term,” he said.
In his budget presentation last year, Jordan had said that with more than 20% of NIS monies ensnared in the Clico debacle and not earning income, the Scheme is in trouble and needs an urgent solution.
Clico collapsed in 2009. Clico (Guyana) had invested $6.9 billion (US$34 million) in Clico (Bahamas) which represented 53% of the local company’s assets. Although this investment was liquid on paper, subsequent investigations revealed that this sum was tied up in real estate investments that Clico (Bahamas) had in Florida through subsidiaries. When Clico (Bahamas) was ordered liquidated, the local company was subsequently placed under judicial management. After a review of the company’s affairs, the then judicial manager Maria van Beek recommended that the company be wound up but this was subsequently challenged by directors.
The NIS is now facing annual deficits as expenditure has begun to exceed intake. Resolution No. 82 of 2009, which was passed by the National Assembly, had called on the government to take “all possible actions to secure the investments made in CLICO (Guyana) by the NIS on behalf of contributors and beneficiaries of the Scheme to prevent any consequential loss in benefits to them.”
Meanwhile, Jordan said yesterday that the management of NIS will work diligently to ensure greater compliance through the enforcement of the laws. “This year, management will be targeting delinquent businesses and employers, in order to recover the $1.3 billion in arrears owed to the Scheme,” he declared.
According to Jordan, the NIS will also be examining an appropriate investment policy to guide its investments to ensure that future investments are profitable. “Mr Speaker, NIS plays an important role in enhancing the capacity of the poor and vulnerable to manage risks such as unemployment, disability, sickness and old age. Given this, as well as government’s commitment to reduce poverty and inequality within our society, we will ensure that profitability is restored at NIS over the longer term,” he pledged.
