Social security in bond
The government yesterday unveiled a plan to finance the Social Security Foundation (IKA), the largest pension and welfare fund, over the next 30 years through a combination of budget funds and long-term bonds. The approach is similar to the one adopted for the reform of the social security system as a whole: it promises funds and places the burden of raising them upon future governments. The bonds, preferably of 15-year duration, will be issued between 2008 and 2032 and will raise a total of slightly over 28 billion euros, but the sum will have to be paid back at an annual interest of 3 percent. In addition, the budget will provide a sum equivalent to 1 percent of GDP up to 2032, a total of 100 billion euros. Economy and Finance Minister Nikos Christodoulakis announced that the projections are based on average gross domestic product (GDP) growth of 4 percent until 2010 and 3 percent from 2011 to 2020. The government has estimated that IKA’s deficits in the period from 2003 to 2032 will total 108.6 billion euros, meaning that the government’s plan will be more than adequate. Asked, however, about the projected number of IKA pensioners during the next 30 years, Christodoulakis replied that their numbers had not been estimated yet. He announced that a way has been found to exclude the bonds from the public debt; however, the European Union’s statistics agency Eurostat only recently warned the government not to hide debt using imaginative accounting techniques. The funding scheme was unveiled yesterday in order to precede today’s meeting of the executive body of the General Confederation of Greek Labor (GSEE). GSEE will discuss a possible strike on April 18. Opposition unionists accused the government of offering «a few crumbs» to prevent the strike. At the moment, the 45-member GSEE executive appears evenly divided, with 22 favoring and 22 opposing the strike. A lone independent conservative unionist will swing the vote. Opposition New Democracy MP Nikitas Kaklamanis denounced the measures as «aiming not to save social security but prolong the life of this government.» The Left Coalition party said the measures left the welfare state still weak. AEKA, a coalition of reform leftists, called the government the victim of «pressure of hardliners within the ruling party and the rigid demands of part of the union movement.»
