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NIS to receive $5.6B loan for CLICO fallout
Government has announced a $5.6B long-term loan for the National Insurance Scheme (NIS), to help the entity recover its investments in the now bankrupt Colonial Life Insurance Company (CLICO).
Government is set to sign a key agreement today that will see NIS receiving $5.6B in a loan to help its losses from the CLICO investment.
Today, a signing of the Debenture Agreement with NIS will take place at the Ministry of Finance, Main Street, for an aggregated value of $5.6B being injected in the scheme.
NIS is facing a tough future as its revenues have started to fall. This is because of a dwindling number of contributions from self-employed and other categories.
While it has almost $30B in its accounts, payments for pensions and other expenses have been outstripping collections, leaving deep worrying about the long term viability. A growing number of pensioners are not helping the situation too much.
NIS enforcement has been blamed partly on the scheme’s woes.
In May, Finance Minister, Winston Jordan, said that going to court to recover the US$30M invested by NIS in CLICO may be useless.
He said that the sad reality is that the CLICO situation might very well turn out to be a long drawn-out process, as Guyana is not even on the radar when it comes to the settlement process in the Caribbean as yet.
”So Government is going to have to step up to the plate and find another way of recouping the losses for NIS in this regard. Government gave a commitment in this regard, and it will have to make good on its promise to find a resolution on getting back the money. And this is yet another mess that we inherited from the past administration that we are saddled with fixing with money that could have been put to better use,” the Minister said then.
Government, in 2009, seized local properties from CLICO in Guyana to help pay policyholders, after it became clear that the regional insurance giant was in dire financial problems. Some 7,744 policyholders were paid a total of $4.1B.
Jordan noted that NIS is beset with a number of problems. He said that the $5.2 billion that remains caught in the CLICO debacle, represents more than 20 percent of its assets that is not earning income.
He said that actuaries have projected that the scheme is in trouble and something has to be done urgently to address the problem.
Jordan maintained that Government intends to examine options for the expedient repayment of $5.24 billion owed by CLICO.
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