By Lazarus Amukeshe, Nghinomenwa Erastus, Shinovene Immanuel | 06 May 2019
Schlettwein said this in a statement dismissing an article published by The Namibian on Friday titled ‘GIPF gambles with pensioners money’ when it allowed the state to borrow N$34 billion.
The article focused on the risks to pensioners’ savings, and the government increasingly borrowing pensioners’ money to fund the budget shortfall.
Schlettwein, however, countered that the article was not factual.
“The article stated that the GIPF absorbed N$13 billion public domestic debt during 2018. This is incorrect, given that the government borrowed in total N$7,3 billion in the local market during that year, of which only N$832 million was taken up by the GIPF,” the minister said.
Schlettwein focused on 2018, although GIPF figures show a vertical spike in government’s borrowing of pensioners’ savings to pay for its expenditure over the three years.
The minister’s statement said the government borrowed N$634 million from the GIPF in 2016, N$8,5 billion in 2017 and N$832 million in 2018.
Another part of the article which infuriated the minister is that the government needed N$52 billion to fund its budget shortfall over the past four years. He said the government needed only N$33,5 billion.
“The insinuation in the article that the government misuses pension fund moneys to fund its budget and that, therefore, the GIPF is overexposed to government debt, are unfounded and misleading,” he added.
The article highlighted how the government changed the law in 2015 to force investment companies in Namibia to invest locally.
Schlettwein said: “Government deliberately finances a larger portion of its funding needs from the local market. The local market, as stipulated above, is dominated by GIPF, which inherently explains why GIPF holds a large portion of local government long-term debt, relative to other market participants.”
The minister stated that GIPF, like any other responsible institutional investor, regularly undertakes a strategic asset allocation analysis, evaluating the fund’s performance against risk, return and diversification objectives.
“These objectives serve to ensure that the funds are invested in a manner that is prudent, and that pensioners receive optimal returns on their investments,” he said.
It is not clear whether the government’s borrowing provides GIPF with similar interest returns as it gets if it were allowed to invest anywhere else.
“GIPF, hence, does not invest in government instruments to meet the government’s funding needs, but also to meet its own required objectives.”
Schlettwein said GIPF is not overexposed by using pension savings to bail out the government.
Tangeni Amupadhi, editor of The Namibian, yesterday defended the article, and welcomed Schlettwein’s comments.
“We take that to heart, and will gladly correct or clarify where wrong impressions may have been created,” he said.
“However, we urge the audience not to lose sight of the crux of the story that, based on the GIPF figures, there has been an increase in government borrowing from their employees’ pension funds to plug expenditure holes.”
The editor said Friday’s story was the first providing figures on the issue.
“We trust the government and its agencies, such as GIPF, Bank of Namibia and Namfisa will appreciate the public good, and provide all details to shed light on an issue that economic and financial investment experts have long raised concerns about,” Amupadhi said.
Asked why the story was worth publishing, he said the increased borrowing has become an urgent issue of public concern, considering that the government has been in a consistent cash flow crisis for several years now, which raises doubts about its long-term ability to pay its debt.
The government did not explain whether it made any payments on the money it borrowed from the GIPF over the years.
The International Monetary Fund (IMF) warned last year that the government’s early retirement and retrenchment plans for civil servants might lead to the GIPF failing to pay out benefits as the number of beneficiaries would increase.