ECONOMY

In Brief

Cypriot funds may be unviable by 2020 Cyprus’s Social Insurance Fund may be financially unviable by 2020, as its 7 billion euros ($9.7 billion) of reserves are not available to pay future benefits, the Cyprus Actuaries Association said. The fund’s reserves exist only «theoretically,» as 96 percent of reserve capital has been lent to the government at an annual interest rate of 1.5 percent, the Nicosia-based association said in an e-mailed statement yesterday. To pay the pensions foreseen over the next 40 years, the government must resort to «borrowing, increasing or reallocating tax revenues, selling government assets or a combination of the above,» the actuaries group said. The International Monetary Fund and the European Commission have urged Cyprus, the euro area’s second-smallest economy, to reform its pension system further. (Bloomberg) Shipowners scrap 91 ships worldwide, says broker Greek shipowners scrapped 91 ships, or 12.5 percent of all vessels sent for demolition worldwide, in the first nine months of 2010, shipbroker Golden Destiny said. The vessels, including 36 tankers, 16 container ships and 15 commodity carriers, had a total carrying capacity of 3.4 million tons, Piraeus-based Golden Destiny said in an e-mailed report yesterday. Last month alone, Greeks scrapped six ships. The rate of scrappage by Greek owners, who have the world’s second-biggest merchant fleet after China, has been «subdued» in 2010, with a concentration on tankers, the broker said. The freight environment in bulk-carrier and container shipping «doesn’t encourage either foreign or Greek owners to scrap their overaged units,» it added. Crude oil tanker markets face a two-year trough as the fleet of vessels is expanding at a record pace, causing ship prices to decline, Morgan Stanley analysts said in a report published on October 14. The analysts were upbeat on dry-bulk and container shipping due to Chinese economic growth and expansion in long-distance cargo shipments. (Bloomberg) OTE CEO Greece’s biggest telecom company, the Hellenic Telecommunications Organization (OTE), appointed Michael Tsamaz, the former head of its mobile phone unit, as the company’s new CEO yesterday, with a mission to cut costs and defend market share in a shrinking, austerity-hit market. Greece and Deutsche Telekom, which together own 50 percent of OTE, agreed on Tsamaz as the CEO and chairman of the company. OTE posted a 61-million-euro ($85 million) loss in the second quarter, hurt by falling phone use and a one-off austerity tax. «I am certain that Michael Tsamaz, as a common choice by the main shareholders of the organization, will successfully face the difficult tasks ahead and will guide OTE,» Finance Minister Giorgos Papaconstantinou said in a statement. OTE’s shares rose after the appointment, with analysts saying that Tsamaz is an insider with a good track record who could turn the company around. (Reuters) Private pensions Bulgaria’s government is considering redirecting funds from private pensions back into the state pension system, plans that analysts and business groups said could undermine its fledgling financial markets, which fell yesterday after the news. The center-right government, struggling to fill yawning fiscal shortfalls after a prolonged recession, is mulling suspending payments to private vocational pension funds as of next year, Labor Minister Totyu Mladenov has said. The plan echoes neighbor Hungary’s recent move toward nationalizing its pension system, which the European Commission has criticized. It may also transfer funds accumulated so far to a state fund, a move analysts and pension funds say is «actual nationalization» which will hurt investor confidence and further stifle weak economic recovery. «These plans… will hit hard the peoples’ trust in the pension system – and investors.» (Reuters)