THE government will deposit 200 million euros in the coming days into the Social Security Fund (SSF), the Finance Minister Charilaos Stavrakis announced yesterday to cries of “accounting tricks” by the opposition DISY and government partner DIKO.
Speaking after a meeting with Labour Minister Sotiroula Charalambous and social partners to discuss how to invest the extra funds, Stavrakis said that for many years the fund has had no reserve.
“We already deposited the first instalment last year,” he said, noting that the second instalment is due to be deposited within the next few days.
The present administration decided last year to pay five annual instalments of 200m euros as part of the government’s commitment to add one billion euros to the fund’s reserves during the 2009-2013 period. Successive governments have already amassed a 7.2b euros debt to the fund.
Asked how the money would be invested, Stavrakis said the government has entered into a consultation period with its social partners on a draft bill regarding investment, after which it will go to parliament for debate and approval.
Despite yesterday’s meeting to discuss possible investments, he highlighted that the finance ministry has exclusive responsibility over the investment policy.
Stavrakis said the general consensus was that the majority of the capital should be invested in the Cyprus international bond issue made available to investors yesterday, although opinions were also voiced favouring the placement of a much smaller amount in banks and co-operative credit institutions.
However, the government’s intention to invest the instalment in government bonds was met with scepticism in parliament.
House Finance Committee Chairman Nicolas Papadopoulos said the government’s claim that the SSF is viable until 2048 is “based on false assumptions that are unrealistic”.
The DIKO deputy argued that instead of paying into the fund, the government was effectively borrowing from the fund by investing in government bonds.
“At this rate, the SSF won’t make it past the decade,” he said.
DISY deputy Averof Neophytou was even more blunt: “Theoretically and on paper the SSF exists. There isn’t even one cent, we’ve already spent it, all the governments.”
He accused the government of “misinformation” regarding the latest instalment, pointing out that it was trying to raise funds through government bonds.
Describing the move as “accounting tricks”, he said: “Those who understand basic economics, finance or banking are laughing about this.”
