Social security funds have suffered losses of 8.3 billion euros due to last spring’s private sector involvement (PSI) in reducing the country’s debt burden, according to Bank of Greece data forwarded to Parliament by the Finance Ministry on Tuesday.
The reason the funds sustained such great losses was because they had money invested in the joint social security capital of the Bank of Greece that in turn was used to purchase state bonds, which were subject to a 53.5 percent haircut in March.
The figure of 8.3 billion is based on the amount the funds were due to receive when the bonds reached maturity (i.e. from 2021 to 2041).
If they were to liquidate their bonds now and calculate their reserves’ current value, they would find their losses to be even greater, as market prices would take them up to 12 billion euros.
The value of the funds’ bonds that suffered a haircut was 18.7 billion euros before the PSI, the Bank of Greece data showed. The data was provided in response to a question in Parliament by SYRIZA deputy Alexis Mitropoulos.