These bad investments are being highlighted as NIB officials recently expressed concerns that the Fund is already in jeopardy and could be depleted in a quarter of a century if the current 8.8 percent contribution rate is maintained.<\/P><\/p>\n
But government officials point to the difficulty in “pressuring” corporations to repay their loans as all the funds involved are really public funds.<\/P><\/p>\n
“It’s like the government getting on the government to pay back a quasi-government entity,” one official noted. <\/P><\/p>\n
The Water and Sewerage Corporation alone has been in default of two loans for a dozen years, according to the December 31, 2002 consolidated financial statements that the Board is preparing to release.<\/P><\/p>\n
From as far back as 1984 and then again in 1987, the corporation borrowed a total of $5.4 million to finance various commercial bank loans and to carryout a water supply and sewerage rehabilitation project in New Providence.<\/P><\/p>\n
But as of July 1, 1991, the corporation was in default of repayments and interest on both loans. The outstanding principal and interest repayments now amount to about $15 million.<\/P><\/p>\n
Bahamasair also owes the Fund millions of dollars.<\/P><\/p>\n
In October 1989, the airline borrowed $6 million to expand its operations.<\/P><\/p>\n
But it too has been in default for 12 years and now owes NIB more than $13 million.<\/P><\/p>\n
The Fund has traditionally granted loans to various government corporations for different projects.<\/P><\/p>\n
Ten million dollars was loaned to the Bahamas Electricity Corporation in 1989 to expand their power generating system. The current portion of that loan that is due this year is $528,000, according to the financial statements.<\/P><\/p>\n
The Bahamas Development Bank, meanwhile, is still paying off a $3.5 million loan it got way back in 1984 to enable it to lend to deserving borrowers in the field of agriculture, small-scale industry and fisheries.<\/P><\/p>\n
An official close to the Fund told the Bahama Journal that there is no telling if or when Bahamasair and the Water and Sewerage Corporation will be in a position anytime soon to repay their loans.<\/P><\/p>\n
Bad loans aren’t the only factors that may lead to placing the Fund in jeopardy.<\/P><\/p>\n
NIB’s most recent Actuarial Review said that changes have become necessary to counter the effects of ageing populations, projected cash shortfalls and declining public confidence in such social programmes.<\/P><\/p>\n
On December 31, 2001, NIB benefits reserves stood at $1.1 billion.<\/P><\/p>\n
The size of the National Insurance Fund relative to the Bahamian economy, and the restriction on investing overseas, often makes it difficult to find suitable investments, the report noted.<\/P><\/p>\n
With reserves projected to nearly double in the next 15 years, new investment avenues and a revised approach to investing NIB funds will be required, according to the Actuarial Review.<\/P><\/p>\n
By Candia Dames, The Bahama Journal<\/B><\/P><\/p>\n","protected":false},"excerpt":{"rendered":"
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