…says APNU/AFC MP’s claims of failure a fallacy
Vice President Bharrat Jagdeo on Friday said that the National Insurance Scheme’s investment in the Berbice Bridge Company was the best use of its funds since NIS has already earned some $3.3 billion so far from its $2.5 billion investment and will continue to rake in billions more.
He was at the time dispelling claims made by Opposition Member of Parliament Volda Lawrence, who said NIS was destroyed under the Jagdeo presidency after it was made to invest in the Berbice Bridge and other projects.
But according to the Vice President, NIS has already received return payments for more than half of its investment along with nearly $1 billion in interest thus far from the Berbice Bridge Company.
“They invested about $2.59 billion in total; how much money did they receive back from the bridge? They receive $2 billion in interest and payment for their preference shares, and about $1.3 billion in principle repayment. So, so far, they have received $3.3 million from a $2.5 billion investment,” he posited.
Jagdeo noted that unlike the other investors in the Berbice Bridge, who are yet to receive any payments, NIS invested in the most lucrative aspect of the company, that is, the loans and not the equity.
NIS invested $300 million in Bond One at nine per cent; $760 million in Bond Two at a 10 per cent rate; $500 million in subordinate debt at 11 per cent; $950 in preference shares, and $80 million in common shares.
As a result of these investments, to date, $300 million was repaid in full on Bond One along with $276 million in interest; and for Bond Two, $995 million was received in interests alone.
With regards to the subordinate debt, which is ongoing, $65 million has been redeemed so far and $517 million in interest was received; and $268 million was paid to NIS on the preference shares, while no returns were paid for the $80 million common shares.
This means NIS has received $2 billion interest and payment for preference shares, and another $1.3 billion from its principal investment.
“Nowhere could they have gotten a 9, 10, 11 per cent interest and they don’t have to pay any taxes on the returns.”
Jagdeo pointed out that this was the best investment NIS could have made, especially since it will continue to earn more from its investment in the Berbice Bridge.
“It’s the highest yielding instrument that yields more than the Treasury Bill had they invested it [there]. They used to invest this [money] in Treasury Bills but they would not have had this return. Imagine they receive so far, $3.25 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 into billions of dollars. So, this is the reality of the NIS investment. It was one of the best investments for the NIS,” he contended.
According to the Vice President, Lawrence’s allegations that the investment in the bridge company was the cause of NIS’ state of affairs is nothing but a “fallacy”.
He highlighted records that NIS has been operating in deficits for the past five years. This is after the APNU/AFC would have received a surplus entity when it took office in 2015.
That year, NIS had an operating surplus of $968 million and $168 million the following year.
However, in 2017, things started to spiral at the entity with a deficit of $175 million recorded that year; $1.6 billion deficit in 2018, $1 billion deficit in 2019, $1.7 billion in 2020 and $2.8 billion deficit in 2021.
But Jagdeo explained that the operating deficit trend over the last two years was largely due to low contributions as a result of the COVID-19 pandemic during which job losses were at an all-time high.
The Opposition’s claims stemmed from comments made by Jagdeo during a recent outreach in Region Five (Mahaica-Berbice), where he was asked about plans to increase the NIS benefit.
In response, however, the Vice President explained to residents that NIS is currently bankrupt but he assured that the PPP/C government will inject resources into the entity to ensure that contributors get their benefits.
“The focus is on ensuring that people can, for the next 100 years, benefit… [NIS contributors] will have nothing to worry about. We will cure the deficit using whatever means – the Consolidated Fund or whatever other means, direct contribution into the NIS – to ensure that for the next 100 years, it’s viable and that people can receive their benefits. What I could not commit to was an increase in benefits at that time,” he stated.
VP Jagdeo further pointed out that while there could potentially be an increase in benefits, giving such a commitment at an outreach was not appropriate.
“I made it clear that whatever is, by law, mandated that we’d have to do that but I could not commit to a generalised increase,” he added.