The country’s dwindling foreign reserves situation is getting in the way of the National Insurance Scheme (NIS) investing abroad, it was revealed today.
NIS Chairman Dr Justin Robinson disclosed that an actuary review had recommended that at least 20 per cent of the National Insurance Fund’s investment should be overseas.
However, with the country’s foreign reserves plummeting to about 9.7 weeks of imports to $635.5 million at the end of June, Robinson, an economist, said the current situation made it impractical to invest this much abroad.
Stressing that politics was not a consideration, he explained that investing one-fifth of the fund’s $5 billion overseas would put a strain on the already under pressure international reserves.
“There is no political pressure driving the investment policy of the NIS, and there is no ignoring of the actuary. But as you seek to deploy those funds you are struck with the practical realities of placing those funds in a small economy,” Robinson told the official opening of the Old Male Barracks and Gym at Central Police Station.
The refurbishment of that facility was funded by the NIS to the tune of $2.2 million, which Robinson said came from “part of its surplus funds”.
“The actuary is recommending there should be 20 per cent overseas and no more than 50 per cent should be in the Government of Barbados and 30 per cent then implies, would be invested locally.”
The NIS currently has about 75 per cent of its investment in Government papers.
Robinson also defended the NIS board, which last week came in for scathing criticism from Charles Herbert, the founding principal of Eckler Ltd and head of the Barbados Private Sector Association.
Herbert had complained that his repeated requests for a copy of the 15th actuarial review had been ignored, and had demanded greater transparency and accountability from the NIS, including more timely financial statements and disclosure of the names of persons comprising its nine-member tripartite board.
However, while not mentioning Herbert by name, Robinson said he was aware that “a very concerned citizen” had raised questions about the governance of the NIS, but that the delay in publishing the review was not deliberate.
“In terms of the review, I think there were quite a bit of mystique and suggestion that the NIS was reluctant to make the review public. The NIS can only make the review public after it has been officially laid in Parliament,” he said, adding that the late publication of the fund’s financial statements was a “long-standing problem” that was “clearly unacceptable”, but was “occupying the attention of the board and management”.
Explaining that there was a new process involved in the preparation of the financial statements, Robinson said progress was being made in bringing financial statements up to date.
He said the Auditor General had indicated that Ernst and Young would have the 2007 audit ready by the end of November, with the 2008 and 2009 audits ready by the end of December 2017.
“In an effort to fast track the years that his department is responsible for, from November 1, 2017 he will be assigning a team of auditors to the NIS on a full time basis,” Robinson said of the Auditor General’s promise.
“So again, I want to say it is unacceptable, the financial statements need to be prepared on time, but I think it is disingenuous to suggest that nothing is being done to address it. This is a long-term problem. Once you build up a backlog of this nature it is going to take an effort and time to clear it and it is being actively addressed,” Robinson assured.