Tarron Khemraj
Given the recent disclosure by the National Insurance Scheme (NIS) that it stands to lose G$414 million in earnings this year due to a combination of factors, including the closure of sugar estates, Economics Professor Tarron Khemraj has said that could increase the likelihood of a possible collapse.
He told Guyana Times International in a recent interview that the NIS has had serious sustainability issues even two to three years ago, and this was stated in the last actuarial report. As such, he feels that with this recent news, it could only compound the sustainability of the Scheme and further decrease its viability.
“The last actuarial review predicted a negative reserve. From a general standpoint, all of these things will definitely imperil the capacity of the Insurance Scheme to have a growing portfolio. It could only be able to serve its members when it stacks its portfolio up with revenue,” he explained.
But the economics professor noted that the NIS has been getting problems from many directions, with one aspect being the treasury bills and the fact that the Berbice Bridge Company Incorporated (BBCI) is not earning large profits. “If anything, it does increase the likelihood of a possible collapse, where it may require a bailout sometime. It shows how everything in the economy is connected,” he added.
However, Khemraj explained that NIS is expected to incur losses not only on the basis of downsizing within the sugar industry and the Guyana Sugar Corporation (GuySuCo). He said, “…all the other industries…are contracting right now…dwindling contributions, which is very troubling.”
NIS Finance Controller Jacqueline Scotland, who along with other senior officers appeared before the Parliamentary Sectoral Committee on Social Services, revealed the information on impeding losses. Scotland disclosed that the Scheme’s current fund stands at G$31.9 billion as at June 30.
It was also noted that GuySuCo is one of the largest defaulters, owing in excess of G$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 G$250 million in accumulated interest on the outstanding amount.
Greaves said the Scheme plans 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 also implemented a debt management section to pursue persons who owe them. But, even with this new system, there are fears about continued slippage of contribution, as against the payment of benefits. This year, NIS is expected to pay out G$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 5,000 workers being severed, 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.
It was disclosed in the last actuarial 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 are effectively implemented. The NIS could move to recommend an increase in payments soon.
