The Opposition United Progressive Party is chastising the government once more for its approach to improving the stability of the Antigua and Barbuda Social Security Board (ABSSB) as the body’s director seeks to clarify the present state of operations.
Chief among the concerns of the party’s political leader Harold Lovell is the government’s decision to transfer the ownership of the former US Air Station, valued at EC$83.5 million, to the ABSSB in order to reduce the principal on a bond and ultimately interest payments meant to improve the financial health of the body.
He has condemned the move as a “deplorable one” that should have never occurred, claiming that the government has robbed the ABSSB of the needed income coming from the interest on the bond.
“What they needed to do with all the CIP money that they were getting… they needed to pay cash on the bond. In paying cash on the bond, they would have given Social Security the necessary liquidity so that they can meet their obligations,” Lovell added, noting that the original intent was for the bond to be only reduced with cash payments.
A statement from the party on the matter contends that, in 2010, the bond was issued as a mechanism of repayment of the debt owed by government to Social Security. At the time, the debt to Social Security was EC$550 million, most of which he said was accrued during the VC Bird and Lester Bird ALP administrations, over a 28-year period.
The Memorandum of Understanding that was signed between the government and Social Security then outlined both cash and asset swaps – EC$330 million of the debt was placed on a bond, while the balance of EC$220 million was to be satisfied through the transfer of physical assets such as land and buildings and/or shares in entities with government interest.
The UPP also pointed to a recent statement from the Director of Social Security David Matthias who had indicated that the total cash payments made to the scheme in nine years by the ruling Labour Party administration amount to EC$214,921,496, and the total dollar value in cash payments that represent regular contributions is EC$211,421,496.
“This means that only EC$3.5 million dollars has been paid on a bond of EC$330 million in the nine years this administration has been in office.
“This is contrary to Gaston Browne’s oft-repeated claim that his administration has paid well above what is due to the bond,” the statement said, adding that this amount is “insufficient to cover even half of a single month’s pension payments”.
The party said, in contrast, the former UPP administration paid EC$30 million on the bond during a four-year period.
However, Matthias said while the ruling administration has not paid the interest in cash to Social Security, it instead has stood as a guarantor such that the statutory body can access lines of credit through the commercial banking market, which is “deliberately intended to assist the liquidity” of the Board.
He also explained that Social Security presently earns EC$78,000 per year from the Air Base’s Coolidge location, which presently has one tenant, while it earns EC$420,000 per year through the same means from the Burma location.
He said that the ABSSD continues to engage entities so that the property will ultimately be fully utilised with a target of realising EC$1 million or more from the property.
The current monthly shortfall for the body after pensions, according to the director, stands at EC$700,000, and he believes that can be remedied should the Board become successful at finding “the best rental income”.
Matthias further explained that, in questioning the government’s contributions towards the viability of the scheme, one cannot exclude increases in the rate contribution and pensionable age back in 2016.
The Social Security director also explained that while the MOU prescribes that the government make an average payment of EC$1.5 million on the bond monthly which the UPP honoured, the present administration has been honouring its “full liability” each month amounting to the aforementioned EC$211,421,496 paid in.
He said the net result is that the ruling administration would have paid “greater than” the UPP during their term in office.
He continues to stress the need for a departure from the politicisation of the matter and explained that discussions continue with the government on reaching an immediate resolution to the financial issues and the long-term viability of the Board which is a process that takes time and the input of all parties involved.
Mattias maintains that patience is needed as negotiations continue, noting that discussions on the MOU started in 2007 during the UPP’s tenure and it was signed in 2010.