Greece’s state insurance funds are resorting to external loans to cover their needs as fears grow that the measures of the third bailout will not be enough to cover the rest of 2015’s liquidity needs.
The Unified Fund for the Self-Employed (ETAA) received funding from the Generational Solidarity Insurance Fund (AKAGE) to cover its legal and notary workers’ branch. A similar application for 180 million euros has been approved by the board of the country’s biggest insurance fund, the Social Insurance Institute (IKA).
A ministerial decision by Labor Minister Giorgos Katrougalos and Alternate Finance Minister Dimitris Mardas foresees economic assistance to the tune of 20 million euros from AKAGE to ETAA to cover part of the latter’s deficit.
The problems within ETAA’s notary division are well-known, with the fund recently having to liquidate some of its assets at loss to cover its needs.
The Social Insurance Institute also took a short-term loan of 110 million euros in August to pay September’s pensions. The decision means that 70 million euros of the loan will be taken by IKA’s Public Insurance Fund and the remaining 40 million euros by its Municipal Insurance Fund.
In July, IKA’s revenues increased to 1.1 billion euros, up from 900 million euros in June as many were worried about a haircut on deposits and paid their arrears to the state. The same cannot be said for August.
The deficit of AKAGE is expected to grow due to the dramatic increase in unemployment, political and economic uncertainty, capital controls, the measures of the third memorandum and the early elections, which are expected to impact on the revenues of insurance funds this autumn.
Compared to June 2014, when the state insurance funds recorded a surplus of 407 million euros, a deficit of 1.4 billion euros has appeared within the space of one year.
From the measures in the third memorandum expected to save the state money in 2015, limited funds will be generated for paying pensions. For example, reducing early retirement will generate just 3 million euros in 2015 after paying out the minimum pension.