Boatswain: People are confused about the NIS ‘hair cut’

Education Minister Anthony Boatswain says the negative outpouring in the country surrounding Government’s request for a 50% haircut from the State-owned National Insurance Scheme (NIS) is nothing more than genuine misunderstanding and misrepresentation of the facts by the public-at-large.

Addressing Tuesday’s post-Cabinet press briefing, Minister Boatswain said that some people have misunderstood government’s request for a 50% “haircut” from the scheme.

He told the media that the 16-month old New National Party (NNP) administration of Prime Minister Dr. Keith Mitchell understands the concerns of the Grenadian people on the impact of the debt restructuring on the NIS to meet its obligations to workers and contributors.

However, he said these concerns are unfounded and not based on true facts and as such he believes there is a misunderstanding on what is proposed by government.

According to Minister Boatswain, his government supports the long-term viability of the scheme and to jeopardise the existence of NIS will be to commit political suicide.

A former Minister of Finance himself, the St. Patrick West Member of Parliament pointed out that Government is mandated by law to protect the NIS.

“Government is not asking any worker or contributor of the NIS to take a haircut on any benefit that he or she is currently receiving or expected to receive from the National Insurance Scheme…”, he said.

“The haircut that government is proposing to the NIS is not on government’s total indebtedness to the National Insurance Scheme, but only on one component – the NIS Investment Portfolio with the Government – the 2025 Bond”, he added.

The senior government minister indicated that government is not touching pensioners’ monies received from NIS contributors but only with the NIS 2025 Bond, which was restructured in 2005 under a previous NNP administration.

He charged that government’s proposal does not include a haircut on its $218 million loan to the NIS.
“Revenue from the Bond is not the primary source of income for the NIS to meet its monthly requirements to employees and contributors. The primary source of revenue for the NIS is employee/employer contributions to the Scheme, and nobody touching that”, Boatswain said.

An economist by profession, the government minister said what is surprising and disappointing is that no one is considering the importance of equability in terms of seeking the same level of debt forgiveness from all of Grenada’s creditors.

The Mitchell-led government is said to be seeking a 50-60% “hair cut” from international creditors of Grenada’s estimated EC$2.4 billion debt.

Minister Boatswain disclosed that the NNP administration has absolutely no choice in seeking to restructure the NIS debt.

He sought to remind Grenadians that the country is asking foreign pensioners to take a haircut and as such it is only fair and just also to ask local pension fund investors to do the same.

According to Minister Boatswain, there are positive long-term impacts that can arise from the move if the NIS accepts the request from government as this would bring benefits to the Grenadian people, the NIS itself and the New Economy that was promised by the NNP in the campaign for the February 2013 general elections.

He said it will trigger significant inflows of grants, concessionary loans and debt relief in excess of $700 million into the economy under the three-year Structural Adjustment Programme, as well as generate and create sustainable employment.

“With more employment created, the greater the contributions from workers and employers to the National Insurance Scheme. If not, what (we) will have is no inflow of funds into the country, the economy stagnates, no jobs being created, no contributions to the NIS which accounts for 80% for the NIS Revenue,” he told reporters.

Minister Boatswain stated that the greatest threat to the long-term viability and survival of the NIS is not the proposed 50-60% haircut bring requested by government but the prospect of zero growth in the economy and rising unemployment.

The Minister is encouraging Grenadians not to become too emotional about the issue and look at the facts.
The NIS Bonds are valued at $92 millions while government is indebted to the NIS to the tune of $218 million.

Boatswain said the request is still before the NIS Board of Directors for their consideration.

The Grenada Trade Union Council (GTUC) which has two representatives on the NIS 7-member governing Board of Directors is opposed to the proposal.

Meanwhile, the Board of Directors of the Washington-based International Monetary Fund (IMF) was expected to meet on Thursday to decide on the Grenada’s Structural Adjustment Programme.

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