NIS will collapse if it pays unemployment benefits – Jagdeo

…says Minister Jordan’s idea absurd and unrealistic

Opposition Leader Bharrat Jagdeo has rubbished the idea proposed to the National Insurance Scheme (NIS) by Finance Minister Winston Jordan to consider issuing unemployment benefits, stating that it was not only unrealistic but had the potential to cause a collapse of the Scheme.
At a recent event to mark NIS’s 49th anniversary, the Minister urged the NIS Board to consider the proposal and have it implemented for a short period of at least six months. He said it could help address the country’s social and unemployment problems.
But Jagdeo has said that the idea did not take into account the current financial status of the Scheme and its ability to meet its current obligations. He noted that the last actuarial report recommended that focus be placed on building the reserve

to avoid a deficit.
In fact, it was disclosed in that report that the life of the Scheme should come to an end in 2021/22 unless strategic plans for revenue earnings and expansion of the investment portfolio were effectively implemented.
“What has happened since is that this Government has fired 7000 sugar workers, many others. Let’s say maybe 20,000 more have lost their jobs. Take of the 20,000, just take another 8000 who were paying NIS, so those are people who are not contributing to NIS,” he explained.
This translates to decreased inflows for NIS and a payout that would remain constant or increase. In the last financial statement issued by the Scheme, it showed a deficit of over $800 million.
“So, we are already in a deficit, getting worse and then the Minister says pay unemployment benefits. This would cause the Scheme to collapse immediately. Because if you have to pay unemployment benefits now on top of your routine obligations to individuals, that would cause a collapse of the NIS and every single Guyanese who are making contributions will be at risk.”
The former Head of State noted that Minister Jordan was not too concerned about increasing the intake at NIS to make it more viable, but was suggesting spending more. As such, Jagdeo described the idea as absurd and one that did not result from realistic thought.
He said, “And when this Government is generating a significant part of the unemployment. But he could spend $1.6 billion increase on dietary (food) rather than putting that towards NIS…or he could say the $544 million increase in rental

of buildings for Government, we will give this to NIS.”
NIS Finance Controller Jacqueline Scotland, who, along with other senior officers appeared before the Parliamentary Sectoral Committee on Social Services in August, had revealed that NIS stood to lose $414 million in earnings this year owing to a combination of factors.
Scotland disclosed that the Scheme’s current fund stood at $31.9 billion as at June 30. It was also noted that the Guyana Sugar Corporation (GuySuCo) is one of the largest defaulters, owing in excess of $1.5 billion to NIS. However, NIS General Manager Holly Greaves told the Committee that the sugar company had paid off the debt, except for $250 million in accumulated interest on the outstanding amount. Greaves said the Scheme planned to take legal action against GuySuCo to recover the money. It has served a demand notice. “We intend to move to the court to get it,” Greaves stated.
NIS has implemented a debt management section to pursue persons who owe the Scheme. But, even with this new system, there are fears about continued slippage of contributions, as against the payment of benefits. This year, NIS is expected to pay out $23.6 billion, with contributions projected to reach $23.2 billion.
With the closure of the Skeldon, Rose Hall, Wales and East Demerara factories, which saw close to 5000 workers being fired, NIS could see significant loss of contributions. And with an aging population, NIS has incurred an increase in payments of at least $2 million each year. As such, NIS could move to recommend an increase in payments in the near future. (Samuel Sukhnandan)