€ 50 mln short­fall in SIF, says Au­di­tor Gen­eral

Financial Mirror (Cyprus) - - FRONT PAGE -

The Au­di­tor Gen­eral’s re­port for the Min­istry of Labour found a EUR 50 mln deficit in the So­cial In­sur­ance Fund for 2013, com­pared to a 156 mln sur­plus in 2012.

Speak­ing at the House Au­dit Com­mit­tee in the pres­ence of the Labour Min­is­ter Zeta Emil­ian­idou, Au­di­tor Gen­eral Odysseas Michaelides said that the amount of pay­ments for un­em­ploy­ment benefits have re­cently ex­ceeded the to­tal rev­enues and the re­serve for this ac­count (un­em­ploy­ment benefits), and there­fore as at 31/12/2013 this fund had a debit bal­ance of EUR 77 mln.

Also the ac­count of other benefits as at 31/12/2012, showed a debit bal­ance of EUR 10 mln, be­cause the amount of pay­ments (grants, aids, benefits) sig­nif­i­cantly ex­ceeded the to­tal rev­enues and re­serves. On 31/12/2013 this debit bal­ance in­creased to EUR 26 mln.

Re­gard­ing the out­stand­ing debt, Michaelides said that on 31/12/2013 this was EUR 97 mln owed to the So­cial In­sur­ance Fund and EUR 38 mln to other funds. In terms of cur­rent li­a­bil­i­ties, he noted that on 31/12/2013, EUR 73 mln were pending for col­lec­tion from em­ploy­ers and self­em­ployed for the SIF and EUR 25 mln for other funds.

He said that Au­dit Of­fice has rec­om­mended to the Min­istry of Labour to de­ter­mine a timetable for es­tab­lish­ing an ac­tion plan that will make it pos­si­ble to re­cover th­ese debts. He also re­ferred to the in­vest­ment pol­icy of the SIF, in­di­cat­ing that for many years the state bor­rowed the sur­pluses of the und and other funds on favourable terms, and that this pol­icy does not en­sure the in­ter­ests of the funds. As he noted, the bal­ance of the Fund on 31/12/2013 was EUR 7.43 bln.

“Of this amount 99.2% was de­posited to the State of which 98.6% was de­posited into the Gen­eral Gov­ern­ment Ac­count in the form of de­posits with very low in­ter­est rate of 0.5% (31/12/2013) and 1.25% (31/12/2012”, he ex­plained.

Emil­ian­idou said that the Min­istry was not yet ready to face all the prob­lems from the eco­nomic cri­sis, as a few years ago there was full em­ploy­ment with an un­em­ploy­ment rate at only 2.8%, while to­day un­em­ploy­ment stands at 16%.

She said she agreed with the Au­di­tor Gen­eral, how­ever it was im­por­tant that in 2014 the SIF deficit has been re­duced to EUR 19.9 mln.

As re­gards the re­cov­ery of debts, the Min­is­ter of Labour said that in 2013 the House ap­proved a bill which pro­vided that the Min­istry would not pro­ceed to crim­i­nal pros­e­cu­tion and would even sus­pend fines for a pe­riod from Septem­ber to De­cem­ber.

On the in­vest­ment pol­icy of the Fund, she said that the Min­istry has sent a let­ter to the Min­istry of Fi­nance, which replied that at this stage the only thing that gov­ern­ment could do was to find the best pos­si­ble in­ter­est rate for the de­posits of the Fund to the gov­ern­ment.

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