Dr Jagdeo says chant about NIS’ investment is a fallacy by Opposition

The National Insurance Scheme (NIS) has to date received some $3.3B from the $2.59B investment in the Berbice River Bridge according to Vice President, Dr. Bharrat Jagdeo. As such, the opposition’s chants about the investment being the reason for the NIS becoming broke is a “fallacy.”

Vice President Jagdeo expressed this view on Friday, during a media conference at his Shiv Chanderpaul Drive office. Dr Jagdeo disclosed that the NIS returns include $2B in interest and payment for the preference shares, and $1.3B in principal repayment. “It’s the highest yielding instrument that yields more than the treasury bill, had they used to invest this in treasury bills they would not have this return,” the VP noted.

He continued, “Imagine they had received so far $3.3 billion from a 2.5 billion investment and they still have a lot of subordinate debt, the preference shares and the common shares in the bridge, and they still own that which will run them into billions of dollars more.”  Dr. Jagdeo pointed out that about $300M was injected into bond one at a nine per cent rate. That amount, he said was reimbursed, along with $276M in interest. Some $1.3B in principal repayment was also received.

He noted further that at a 10 percent rate, another $760M was invested into bond two, which saw the agency collecting $995M in interest; way more than the principal investment. Meanwhile, he said that the subordinate debt was $500M at an 11 percent rate, the preference shares stood at $950M, while the common shares was $80M.

“On the subordinate debt that is ongoing, $65M has been redeemed so far and they received $517M in interest, and on the preference shares $ 268M. On common shares which is only $80M, they have not received any return,” Dr. Jagdeo said.

NIS’ journey to bankruptcy

The former president explained that the NIS had an operating surplus of $968M and $161M in 2015 and 2016 respectively. In 2017, the agency saw about $175M in deficit, while the following year showed a whopping $1.6B in deficit. Further, it was noted that the NIS accounts document exhibited by Dr. Jagdeo showed that in 2019 and 2020, there were about $1B and $1.7B of indebtedness, respectively.

“So, this is what has happened, you see it has moved from an operating surplus into now a huge operating deficit that is what I mean. It is factual,” the Vice President said. “Therefore, we need to cure this issue here, that’s what we have to fix it for that purpose, to make sure that it can continue to pay benefit,” he added.

The Vice President noted that whether through the consolidated funds or other mechanisms, he stressed that government has to intervene to ensure present and past contributors receive their benefits, even up to 100 years from now.